With the platform's growth and the large Colorado deal, what are the new goalposts for annually announced build-to-suit deals, beyond the previous $350M-$500M target?

While the Colorado deal was unique in size, the company expects the build-to-suit goalposts to grow incrementally over time, not a huge leap. The goal is to take the $350M-$500M target incrementally higher in 2027 and 2028 as the denominator grows. “So we want it to grow. We expect it to grow. That is the goal for us to sort of take $350 million to $500 million, incrementally higher in '27 and '28 and so forth. But we're not planning on taking a huge leap forward all of a sudden, it's going to go to $600 million to $1 billion or something like that.”

What gives comfort in the current redevelopment projects, and is there further opportunity to redevelop office into industrial given upcoming office expirations?

The current redevelopments are considered more one-off opportunities, though others are being evaluated. High conviction in the C.H. Robinson redevelopment due to the strong O'Hare market and existing tenant interest. The second project is still being evaluated for scrape-and-rebuild vs. renovation. They will continue to market properties for lease or sale during redevelopment. “I'd consider these probably more one-off. There are a few others that we're evaluating right now, but I'd consider these more of a one-off situation. More to your first question, we have high conviction in the C.H. Robinson redevelopment. The O'Hare market is very strong.”

What shifted in 2026 to make developing so much more attractive than buying assets outright, given the initial soft target for regular property acquisitions?

The expectation for 2026 was always that the majority of investment activity would come from build-to-suit, unlike the prior year. Build-to-suit offers brand-new buildings, fantastic tenant credits, and better overall economics (7.9% cash yield, 9.9% straight-line yield) compared to the competitive and potentially lower-quality regular way market. Build-to-suit is the preferred allocation for new capital. “But we knew coming into the year in terms of the way that we were thinking about our original guidance range for investment activity that the majority of it starting on January 1 was going to be in build-to-suit. So the year has played out really exactly as we would expect it.”

BNL

Broadstone Net Lease (BNL) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Jul 30, 2026

Source: earnings call transcript

Executive summary

Broadstone Net Lease Q2 FY26 — Strong Build-to-Suit Pipeline and Raised Guidance

Broadstone Net Lease delivered a strong second quarter, highlighted by a significant build-to-suit joint venture and an increase in full-year AFFO per share guidance. The company's differentiated growth strategy, particularly its build-to-suit platform, is yielding substantial results, providing clear visibility into future earnings growth. Management is also actively managing its portfolio through strategic dispositions and redevelopments, while maintaining financial discipline and a strong liquidity position.

Highlights

Raised full-year investment guidance midpoint by over $100 million, now $600M-$800M.
Raised full-year AFFO per share guidance midpoint to $1.56, representing nearly 5% earnings growth over 2025.
Secured a landmark $303 million joint venture for an advanced technology facility, adding 100 megawatts of capacity.
In-process build-to-suit pipeline stands at approximately $645 million, providing over 10% growth on current ABR.
Same-store rental revenue grew 2.2% year-over-year, with industrial portfolio growing 3.3%.

Concerns

Incurred $1.6 million in pursuit costs for a build-to-suit opportunity that was ultimately not pursued.
Triboro Project zoning for data center use remains under review, with a decision targeted by year-end.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 AFFO per diluted share	$1.55 to $1.57 high materiality	FY26	High
Full-year 2026 Investments in real estate	$600 million and $800 million high materiality	FY26	High
Full-year 2026 Dispositions	$100 million and $150 million medium materiality	FY26	High
Full-year 2026 Total core general and administrative expenses	$30 million and $31 million low materiality	FY26	High
Full-year 2026 Bad debt assumption	50 basis points low materiality	FY26	High
Pro forma leverage target	6x medium materiality	Ongoing	Medium

BNL operating KPIs by quarter

BNL operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Capital expenditures Build-to-suit developments	$99.4M In total, we deployed $171.9 million during the quarter, including $61.2 million in new property acquisitions, $99.4 million in build-to-suit developments and $10.4 million in incremental investments in existing transitional capital projects. Source: earnings call transcript	$77.3M During the second quarter, we invested $91.5 million, comprised primarily of $77.3 million in build-to-suit developments and $13.5 million in transitional capital. Source: earnings call transcript	-22.2%
Capital expenditures Transitional capital projects	$10.4M In total, we deployed $171.9 million during the quarter, including $61.2 million in new property acquisitions, $99.4 million in build-to-suit developments and $10.4 million in incremental investments in existing transitional capital projects. Source: earnings call transcript	$13.5M During the second quarter, we invested $91.5 million, comprised primarily of $77.3 million in build-to-suit developments and $13.5 million in transitional capital. Source: earnings call transcript	+29.8%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Remaining Disposition Target $21.7 million to $71.7 million Q2 FY26

Calculated from full-year guidance of $100M-$150M less YTD dispositions of $78.3M.

Deals & partnerships

Fortune 20 investment-grade company Develop an advanced technology facility in Colorado $303 million 15-year triple net lease with 2 5-year extension options

The facility will be a powered shell with 100 megawatts of capacity and 3% annual rent increases. The tenant is expected to become Broadstone's largest by ABR. The JV owns land for a second 100-megawatt building with a right of first refusal for the tenant.

Multiple buyers Sale of 9 properties $62 million

Opportunistically recycled capital out of mature and noncore assets.

Multiple buyers Sale of 2 additional properties $4.2 million

Subsequent to quarter end, bringing year-to-date total to 12 properties sold.

Capital programs

Colorado Advanced Technology Facility JV underway $303 million

Spent to date: approximately $70 million

Funding: build-to-suit pipeline

Benefit:100 megawatts of capacity

Landmark development with a Fortune 20 investment-grade company, expected to be meaningfully accretive to 2027 and 2028 earnings.

C.H. Robinson Redevelopment underway $17.9 million

Start: Q2 FY26

Benefit:156,000 sq ft industrial space; expected stabilized ABR of $2.7 million

Converting a functionally obsolete office asset into industrial space in the Chicago MSA, targeting stabilization for Q2 2027 with rent paying.

Claire's Redevelopment (Hoffman Estates) underway

Start: Q3 FY26

Evaluating options for former Claire's asset, including full scrape and rebuild or renovation, while marketing for lease or sale.

Project Triboro underway

Spent to date: approximately $120 million

Benefit:1 gigawatt power supply; 4.5 million sq ft industrial or hyperscale data center campus

Large site in Northeastern Pennsylvania with 3 distinct paths for value creation: land monetization, industrial development, or hyperscale data center campus. First building pad on track for Q4 readiness.

Risks & headwinds

Zoning uncertainty for Project Triboro data center development Decision targeted by year-end

Not quantified, but potential delay or alternative path required.

Mitigation:Engaging constructively with the Borough; alternative path via conditional use zoning amendment; advancing site work common to both industrial and data center outcomes.

Market competitiveness for regular way acquisitions Ongoing

Heavily competitive, putting pressure on pricing.

Mitigation:Focusing on build-to-suit pipeline for better returns; being very selective with regular way deals; pursuing opportunities that add to investment returns.

Potential for pursuit costs on unpursued opportunities Ongoing

$1.6 million incurred in Q2 FY26 for one such instance.

Mitigation:Acknowledged as part of getting to the table for interesting opportunities; economics are evaluated in total for embedded options.

Data center lease delivery risk During construction/delivery phase

Potential for rent credits or abatements if deadlines are missed.

Mitigation:Certain cushions built into lease agreements; excludes force majeure; similar to industrial build-to-suit but with larger monthly rents.

What to watch in Q3 FY26

Project Triboro highest and best use decision

by year-end

Current Evaluating land monetization, industrial development, or hyperscale data center campus.

Target Decision made on highest and best use (land monetization, industrial, or hyperscale data center).

Why it matters

This decision will determine the future scale and value creation path for a significant asset.

Overall, we continue to expect clarity on zoning, power and tenant demand this year, which supports our target of deciding among our 3 paths near-term land monetization, industrial development or hyperscale data center campus, still our view of the site's highest and best use by year-end.

Find out whether BNL delivers this. Inve re-checks your case every morning.

Q&A highlights

Given the high yield and strong tenant of the Colorado data center deal, is it intended for long-term hold or as a future capital source?

Management evaluates every asset for long-term hold versus potential recycling. While proud of the asset and tenant, every asset is for sale at the right price, and they remain open to recycling capital if it makes sense in the future.

“Every asset that we look at in our PRC in terms of our whole sale strategy, we evaluate what's the right decision to make here. Should we be holding this for the long term? And as you said, I mean, the yield on this is really attractive. The tenant is very attractive.”

asked by Anthony Paolone · answered by John Moragne

3 min read 5 chapters

Detailed narrative

Landmark Colorado Advanced Technology Facility JV

Broadstone Net Lease announced a joint venture to develop an advanced technology facility in Colorado for a Fortune 20 investment-grade company. This landmark deal adds an estimated $303 million to the build-to-suit pipeline, with the tenant expected to become the largest by ABR.

The facility will be a powered shell with 100 megawatts of capacity under a 15-year triple net lease, generating an 11.6% straight-line yield and initial cash yields stepping up from 8.5% in year 1 to 9.7% in year 2. Substantial completion is anticipated by March 2027, with embedded optionality for a second 100-megawatt building.

Robust Build-to-Suit Pipeline and Growth Visibility

The in-process build-to-suit pipeline now totals approximately $645 million, including the Colorado development, providing a derisked runway of high-quality developments through 2027. This pipeline boasts a weighted average estimated initial cash yield of 7.9% and a straight-line yield of 9.9%, with a weighted average lease term of 13.7 years and 2.7% annual rent escalations.

The company expects approximately $46 million of incremental annualized base rent from these developments to come online between Q3 2026 and H1 2027, representing over 10% growth on current in-place ABR.

Strategic Capital Recycling and Redevelopment Initiatives

Broadstone continues to opportunistically recycle capital, selling 9 properties for $62 million at a 6.4% cap rate during the quarter, and an additional 2 properties post-quarter end, bringing year-to-date dispositions to $78.3 million at a 6.2% weighted average cap rate.

The company also initiated two redevelopment projects: converting a functionally obsolete office asset in Chicago into a 156,000 sq ft industrial space with an estimated $17.9 million investment, targeting stabilization by Q2 2027 and nearly doubling the original ABR to $2.7 million; and evaluating a former Claire's asset in Hoffman Estates for redevelopment.

Project Triboro Advancement and Optionality

Significant progress was made on Project Triboro, a 550+ acre site in Northeastern Pennsylvania with a 1 gigawatt power supply. The company is advancing earthwork common to both industrial and data center outcomes, with the first building pad expected ready in Q4.

Power infrastructure is progressing, and zoning discussions for a data center are ongoing, with a conditional use path also available. Management sees three distinct paths for value creation: near-term land monetization (potential multiples of $120 million invested capital), industrial development ($520 million total development, mid-to-high 7% yield on cost), or a hyperscale data center campus (over $2.5 billion total project cost).

A decision on the highest and best use is targeted by year-end.

Capital Structure and Liquidity Management

The company ended the quarter with $2.7 billion in total debt and pro forma leverage of 5.9x. Subsequent to quarter-end, Broadstone secured a new $300 million delayed-draw term loan with a January 2030 maturity and amended existing bank loan pricing grids to reduce margins by 5 basis points.

Equity was raised through the ATM program, with $45.5 million in Q2 and an additional $34.4 million post-quarter end, totaling $163 million in unsettled forward sales at a weighted average price of $19.97. Combined with existing revolver capacity, this provides approximately $1 billion of in-place liquidity.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.