Broadstone Net Lease Q1 Earnings Call Highlights

Key Points

• AFFO rose 5.6% year-over-year to $76.9 million ($0.38/share), driven by 2.8% same-store rent growth, no lost rent in the quarter, controlled G&A, 100% rent collection, and management kept the quarterly dividend and 2026 guidance unchanged.
• Broadstone deployed $171.9 million in Q1—including $99.4 million in build-to-suits—and said new developments blend to a ~7.2% first-year cash cap rate (8.3% straight-line yield) while targeting an active committed build-to-suit pipeline of $350M–$500M and evaluating about $1.3 billion of opportunities.
• The company invested $61.2 million in a 60-acre Charles River campus with a 12-year net lease and blended ~9% initial cash cap rate while preserving redevelopment optionality on ~48 acres (potentially ~440,000 buildable sq ft); separately, Project Triboro remains a potential hyperscale data center site with ~1 GW power commitment and management plans to decide the development path by end-2026.

Broadstone Net Lease NYSE: BNL reported first-quarter 2026 adjusted funds from operations (AFFO) growth of 5.6% year over year, supported by same-store rent gains, investment activity, and contributions from build-to-suit developments reaching stabilization. Management also emphasized progress in its build-to-suit platform, early leasing outcomes on 2026 maturities, and ongoing workstreams at its Project Triboro transitional capital investment.

First-quarter results and portfolio performance

Chief Financial Officer Kevin Fennell said the company generated adjusted funds from operations of $76.9 million, or $0.38 per share, up 5.6% from the first quarter of 2025. Fennell attributed the quarter’s performance to “strong same store rent growth of 2.8%” along with “recent investment activity and build-to-suits reaching stabilization.” He added that results “notably benefited from no lost rent realized during the quarter” and lower non-reimbursable property expenses.

General and administrative expenses were “well controlled,” Fennell said, with core expenses totaling $7.8 million. While that was a 5.4% year-over-year increase, he said the change was “largely impacted by one-time or timing related expenses, including employer tax expense for stock vesting and professional services,” and reiterated the company remains on track to meet its G&A guidance.

On leasing, President and Chief Operating Officer Ryan Albano said same-store performance remained strong at 2.8% year-over-year growth, driven by contractual escalations and prior re-leasing. Albano added that the company began 2026 with 22 leases set to expire during the year and has “already addressed half of those leases,” achieving a weighted average recapture rate of 119% and an average new lease term of six years on extended leases. CEO John Moragne later said the strong recapture performance was “mostly driven by industrial” and called 119% “a little bit higher than what we’ve seen” recently.

Albano also provided an update on a previously discussed tenant situation, noting that Gardner-White Furniture assumed six former American Signature locations through the bankruptcy process and that Broadstone executed a new “10-year master lease across all six sites.”

Capital deployment and build-to-suit activity

Moragne said the company deployed $171.9 million during the quarter, including:

• $61.2 million in new property acquisitions
• $99.4 million in build-to-suit developments
• $10.4 million in incremental investments in existing transitional capital projects

Moragne said Broadstone added two build-to-suits earlier in the quarter: a “sub same-day distribution center” in Sarasota, Florida for Amazon sourced through an existing developer relationship, and a retail development for Academy Sports in Magnolia, Texas sourced through the tenant and delivered with a new developer relationship. He also said that after quarter end the company “closed on the land and started funding a new pre-sort battery recycling facility for Tesla” near the Gigafactory in Austin, Texas.

Moragne said the three build-to-suit investments “blend to a first-year initial cash cap rate of 7.2%” with “attractive straight-line yields of 8.3%,” a weighted average lease term of 14 years, and valuations he said were “likely at least 75 basis points-100 basis points below our development yields.”

As anticipated, Moragne said the second of two maintenance, repair and overhaul hangars for Sierra Nevada Corporation commenced rent on April 1, supporting work with the U.S. Air Force. He said both projects reached stabilization “on time and under our budgeted project investments.”

Albano said the company now has “11 in-process developments representing approximately $382 million of total projected investment,” expected to generate initial cash yields of 7.3% and weighted average straight-line yields of 8.4%, with a weighted average lease term of 12.9 years and annual rent escalations of 2.5%. He said Broadstone aims to keep an active committed build-to-suit pipeline of $350 million to $500 million and is “actively evaluating approximately $1.3 billion of build-to-suit opportunities across both existing and new relationships.” Moragne told analysts he felt “very good about hitting that target” for the platform.

Charles River Laboratories acquisition with redevelopment optionality

During the quarter, Broadstone invested $61.2 million in a 60-acre campus near Boston tenanted by Charles River Laboratories. Moragne said the sale-leaseback includes a 12-year net lease with initial cash rent of $1.5 million and 3% annual rent increases, plus a short-term one-year net lease with cash rent of $4 million, producing a blended 9% initial cash cap rate. The company intends to redevelop about 48 acres subject to the short-term lease “in partnership with the Sansone Group,” Moragne said.

Albano said the structure was intentional, preserving near-term cash flow while maintaining flexibility to unlock future redevelopment value. He said the 48-acre portion “has the potential to support up to 440,000 buildable square feet of industrial development.” Moragne described the location as “a premier location in the northern Boston market” and said Broadstone’s cost basis is “slightly below market,” adding the company has already had interest from one tenant for a build-to-suit on the site. He characterized the deal as “direct” and “not broadly marketed,” telling analysts Broadstone would seek similar relationship-driven, creatively structured transactions.

Asked about tenant credit, Moragne said management felt “pretty good” about Charles River and cited internal risk ratings and agency ratings, along with financial metrics including “$4 billion+ of revenue,” leverage of 2.8x, and fixed charge coverage of 3.5x.

Project Triboro: zoning, power, leasing, and near-term spend

Management reiterated that Project Triboro remains targeted toward a hyperscale data center campus, with a backup option of multi-building industrial development. Moragne said Broadstone has invested about $106 million in the project through its transitional capital platform and expects to decide the “best path forward” by the end of 2026, including potential outcomes such as a powered land sale, a powered shell development, or an industrial development approach.

Albano said Broadstone is advancing universal site work—activities that would be required whether the outcome is data center or industrial—such as erosion controls, clearing and grubbing, mine remediation, mass grading, stormwater systems, internal roads, and utilities. In response to a question on capital commitments, Albano said the company expects “less than $15 million” of total Project Triboro spend for this year related to that universal site work, while “the majority” of data center-specific infrastructure costs are being deferred until later in the decision process.

On power, Albano said the site’s 1 GW commitment is supported by existing generation capacity, with efforts focused on transmission and delivery infrastructure. He said PPL plans to build a new substation and switchyard and approximately eight miles of new transmission lines, with construction anticipated to begin in summer 2027 and completion targeted for summer 2030. Albano said the company anticipates first phase energization of 300 MW between the fourth quarter of 2027 and first quarter of 2028, with the remaining 700 MW to follow.

On zoning, Albano said Allentown Borough considered amending its ordinance to expressly allow data centers in the CM2 district but chose not to adopt the amendment as written, beginning a process allowing up to 180 days to address data centers in the ordinance. Albano said Broadstone filed a zoning permit application asserting the data center campus is permitted by right under the current ordinance, and Moragne said the zoning process did not change the company’s timeline.

Balance sheet, equity issuance, dividend, and guidance

Fennell said Broadstone ended the quarter at 5.8x pro forma leverage, unchanged from the prior quarter, with “nearly $600 million available on our revolver” and limited debt maturities through the first half of 2027. He also noted approximately $82.5 million of unsettled equity at quarter end.

Moragne highlighted Broadstone’s inclusion in the S&P 600 Index, which he said should provide support for the company’s cost of equity and help expand its investor base and liquidity. He said the company raised $71 million of equity under its at-the-market (ATM) program during the quarter at a weighted average price of $19.13, bringing total gross proceeds to about $82.5 million on a forward basis at a weighted average price of $19.02. Both Moragne and Fennell said future equity issuance would remain “measured and opportunistic,” dependent on share price and the opportunity set.

The board maintained the quarterly dividend at $0.2925 per share, payable on or before July 15 to shareholders of record as of June 30, Fennell said. The company also maintained its 2026 per-share guidance range of $1.53 to $1.57. Despite reporting no bad debt in the first quarter and 100% rent collection, management said it is maintaining its full-year assumption of 75 basis points of lost rent within 2026 guidance, with Moragne saying the company expects to revisit the assumption after the second quarter.

Dispositions and portfolio positioning

Albano said Broadstone completed a $12 million disposition during the quarter at a 5.6% cap rate on an industrial asset with seven years of remaining lease term. After quarter end, he said the company sold three additional assets for $54.8 million of gross proceeds, including two opportunistic dispositions totaling $50.4 million at a weighted average cap rate of 6.3%, plus a small vacant asset. Moragne said dispositions can serve both risk mitigation and opportunistic cap rate arbitrage, including responding to unsolicited offers.

On portfolio mix, Moragne said Broadstone has historically allocated more than 70% of investment dollars to industrial since 2018–2019 and expects industrial exposure to rise into the “65%-75%” range over time, while retail and restaurants could settle in the “25%, 35%” range as office and other sectors decline.

About Broadstone Net Lease NYSE: BNL

Broadstone Net Lease, Inc NYSE: BNL is a publicly traded real estate investment trust focused on owning and operating single-tenant commercial properties under long-term net leases. The company specializes in acquiring properties that are leased to creditworthy tenants, allowing it to generate predictable, stable rental income while transferring most operating expenses and responsibilities to its lessees.

Broadstone Net Lease’s portfolio spans a variety of property types, including industrial facilities, distribution centers, manufacturing plants, life science and office buildings, and essential retail locations.

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