Broadstone Net Lease initiated with Sector Weight on headwinds at KeyBanc

KeyBanc last night initiated coverage of Broadstone Net Lease with a Sector Weight rating and no price target. Sentiment for the net lease real estate investment trusts remains highly dependent on the path of interest rates and the spread REITs can achieve on investments relative to their cost of capital, the analyst tells investors in a research note. The firm says it would likely become more constructive on the triple net lease REITs if borrowing costs decrease and/or investment yields increase. KeyBanc says that while Broadstone’s fundamentals have been mixed over the last two years, the company’s strategy to right-size its healthcare exposure and recycle capital into higher risk-adjusted return industrial assets could lead to greater earnings growth over time. However, the divestment creates near-term earnings growth headwinds and upcoming swap maturities add additional risk to earnings, the firm adds.