Investment Strategy

Minimizing Risk and Managing Cost of Capital

Broadstone Net Lease acquires freestanding, single-tenant properties net-leased to credit worthy tenants and brands.  The portfolio uses conservative leverage and is constructed of long-term leases with contractual rent increases to help withstand economic volatility.

Why net-leased properties?

  • High return relative to risk level assumed
  • Predictable returns due to tenant responsibilities and long term leases
  • Opportunity for growth in cash flow and valuation attributable to contractual rent increases
  • Ability to access favorable debt financing due to predictable cash flows
  • Growth in rent and ownership of real assets helps to hedge against inflation
  • Still a very fragmented industry and imperfect market, with opportunities for astute buyers
  • Opportunity to add value at time of acquisition through proper negotiation and underwriting

How we generate return and minimize risk:

  • Review and underwrite billions of dollars of deals
  • Study and monitor numerous industries and brands
  • Underwriting methodology: we seek developed properties with credit worthy (not necessarily credit rated) tenants demonstrating significant rent coverage while still stressing real estate fundamentals
  • Diversify by industry, geography and tenant with a focus on recession resistant businesses (e.g., fast food, medical offices)
  • Negotiate long-term leases augmented with personal guarantees or other credit enhancements as necessary
  • Disciplined hold/sell analysis performed regularly for every property.