Release Date: May 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: How is Broadstone Net Lease managing credit risk in its industrial portfolio, particularly with the impact of tariffs on manufacturing activities? A: John Moragne, CEO, explained that they are taking both a top-down and bottom-up approach to assess potential risks. They are evaluating individual tenants and industries that might be affected by tariffs, especially within the 17% of ABR from manufacturing. They are in discussions with tenants to understand their strategies for navigating tariffs, including their ability to pass costs to end users and their sourcing strategies. Despite some concerns, they are confident in their portfolio's resilience.
Q: Can you provide context on the bad debt included in the guidance for the year and any cushion for unforeseen issues? A: John Moragne stated that they started the year with 125 basis points of bad debt in their guidance. They have managed known issues like the Zip's bankruptcy well, reducing potential bad debt exposure. While they have some cushion due to better-than-expected resolutions, they are maintaining the 125 basis points for now, with plans to reassess after Q2.
Q: What is Broadstone's exposure to Claire's, and what are the potential risks? A: John Moragne noted that Broadstone owns Claire's primary distribution facility in the U.S., accounting for about 78 basis points of exposure. Claire's is working on realigning its logistics and inventory processes due to tariffs and is also upgrading its retail footprint. Broadstone is confident in the asset's location and potential for redevelopment if necessary.
Q: How is Broadstone progressing with its build-to-suit pipeline, and what impact do tariffs have on these projects? A: John Moragne highlighted that the pipeline remains robust, with a goal of $500 million in build-to-suit developments for the year. While tariffs and macroeconomic uncertainty have caused some delays, the pipeline's strength and new developer partnerships, like with Prologis, provide confidence in meeting their goals. They are managing cost considerations effectively through various strategies.
Q: What is the strategy for funding the remaining build-to-suit developments, and are there plans for permanent financing? A: John Moragne explained that Broadstone has ample capacity on its credit facility and does not plan to put permanent financing on the developments. They aim to control their destiny by potentially selling assets or using their portfolio to finance developments, rather than relying on market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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