Broadstone Net Lease, Inc. (NYSE:BNL) Q3 2024 Earnings Conference Call October 31, 2024 10:00 AM ET

Company Participants

Brent Maedl - Director of Corporate Finance and IR
John Moragne - CEO
Ryan Albano - President and COO
Kevin Fennell - CFO

Conference Call Participants

Eric Borden - BMO
Anthony Paolone - JP Morgan
Upal Rana - KeyBanc Capital Market
Jay Kornreich - Wedbush Securities
Caitlin Burrows - Goldman Sachs
Ki Bin Kim - Truist

Operator

Hello, and welcome to the Broadstone Net Lease Third Quarter 2024 Earnings Conference Call. My name is Carla, and I'll be 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 relation at Broadstone to begin. Brent, please go ahead.

Brent Maedl

Thank you, everyone, for joining us today for Broadstone Net Lease’s third quarter 2024 earnings call. On today's call, you will hear prepared remarks from CEO, John Moragne; President and COO, Ryan Albano; and CFO, Kevin Fennell. All three will be available for the Q&A portion of this call. As a reminder, the following discussion and answers to your questions contain forward-looking statements, which are subject to risks and uncertainties that can cause actual results to differ materially due to a variety of factors. We caution you not to place undue reliance on these forward-looking statements and refer you to our SEC filings, including our Form 10-K for the year ended December 31, 2023 for a more detailed discussion of the risk factors that may cause such differences. Any forward-looking statements provided during this conference call are only made as of the date of this call. With that, I'll turn the call over to John.

John Moragne

Thank you, Brent. And good morning, everyone. We began 2024 with two main goals; first, to reposition our portfolio through our clinical healthcare simplification strategy, focusing our future on industrial, retail and restaurant assets; and second, to put in place the foundation for attractive and sustainable AFFO per share growth through our differentiated strategy and core building blocks. With the progress we have made to date, particularly in this last quarter, I am proud to say that we believe we have substantially accomplished both and are now looking forward to setting a new baseline for BNL's growth and performance in 2025. Starting with our clinical healthcare simplification strategy. With the completion of the latest tranche of sales, comprising 10 clinical healthcare assets that closed on October 2nd, we successfully brought our total healthcare exposure below 10% but most importantly, reduced our exposure to clinical assets to approximately 4% of our ABR. The 6% of our assets that include animal health services, medtail or medical, retail and life science assets will generally continue to have a home in our broader portfolio and are not the focus of our current disposition efforts. Selling the 4% of our remaining clinical, surgical and traditional medical office assets will remain a goal for us but will not be as much of a front and center focus now that our total clinical exposure is relatively immaterial. In order to maximize value for the remaining clinical assets, we anticipate those dispositions will have various transaction timelines that comfortably extend extended into 2025 and beyond given the need to address some combination of shorter lease duration, space utilization rates or elevated credit risk.