{"id":55026,"date":"2023-08-30T18:14:34","date_gmt":"2023-08-30T22:14:34","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/7-yield-and-undervalued-what-to-make-of-broadstone-net-lease-nysebnl\/"},"modified":"2023-08-30T18:14:43","modified_gmt":"2023-08-30T22:14:43","slug":"7-yield-and-undervalued-what-to-make-of-broadstone-net-lease-nysebnl","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=55026","title":{"rendered":"7% Yield And Undervalued – What To Make Of Broadstone Net Lease? (NYSE:BNL)"},"content":{"rendered":"
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Introduction<\/h2>\n

Rising rates, sticky inflation, and weakening economic growth are a toxic mix for Real Estate Investment Trusts (“REITs”) and real estate in general.<\/p>\n

Looking at the chart below, we see that commercial property prices have come down to pre-pandemic levels as dealmaking is becoming less attractive due to higher financing costs.<\/span><\/p>\n

Also, higher inflation erodes the bottom line of companies with long-term contracts with less-than-decent inflation coverage.<\/p>\n

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Wall Street Journal<\/span><\/p>\n<\/figcaption><\/figure>\n

On top of that, slower economic growth puts pressure on occupancy rates and tenant health.<\/p>\n

Even the best performers with A-rated balance sheets, like Realty Income (O), are suffering in this environment. Realty Income, which likely has the healthiest tenant portfolio and balance sheet in its segment, is now trading at 2021 levels, with a yield close to 5.5%.<\/p>\n

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Data by YCharts<\/figcaption><\/figure>\n

One stock that readers kept bringing up whenever I discussed Realty Income or any of its peers is <\/span>Broadstone Net Lease (NYSE:BNL<\/span>)<\/strong>, a younger and much smaller REIT with a yield of 7%.<\/span><\/p>\n

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Data by YCharts<\/figcaption><\/figure>\n

This REIT is trading more than 40% below its all-time high. It has a below-average valuation, a 7% yield, and a well-diversified portfolio with a near-perfect occupancy rate.<\/p>\n

In this article, we’ll discuss the risk\/reward of this article.<\/p>\n

So, let’s dive in!<\/p>\n

Diversification And High Occupancy<\/h2>\n

A net lease company is a company that engages in contracts where a tenant pays a portion or all of the taxes, insurance fees, and maintenance costs.<\/p>\n

Unlike some of the better-known peers in the REIT space, BNL is very young. The company had its IPO in 2020 after being founded in 2007.<\/p>\n

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Broadstone Net Lease<\/span><\/p>\n<\/figcaption><\/figure>\n

Over the past 17 years, the company has built an impressive portfolio consisting of roughly 800 properties in 44 states and four Canadian provinces.<\/p>\n

The company has no state with more than 10% exposure, with Texas leading the pack, accounting for 9.8% of total annual base rent.<\/p>\n

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Broadstone Net Lease<\/span><\/p>\n<\/figcaption><\/figure>\n

However, even in specific states, the company has cross-diversification<\/em>.<\/p>\n

Looking at Texas, the company has well-diversified sector exposure and no city generating more than a third of total revenues.<\/p>\n

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Broadstone Net Lease<\/span><\/p>\n<\/figcaption><\/figure>\n