Broadstone Net Lease, Inc.

The following discussion includes the results of our operations for the periods presented.

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024

Lease revenues, net

The decrease in Lease revenues, net, was primarily attributable to a $2.2 million write-off of accrued rental income. Write-offs of accrued rental income are discrete charges in a quarter related to collection probabilities and fluctuate quarter to quarter. Additionally, there was a decrease in Other income from real estate transactions related to the settlement of a permanent land easement during the fourth quarter of 2024 that did not reoccur. The decrease is partially offset by an increase in rents related to real property acquisitions and revenue generating capital expenditures during the three months ended March 31, 2025. During the three months ended March 31, 2025, we completed investments of $61.8 million in acquisitions and revenue generating capital expenditures at a weighted average cash capitalization rate of 7.2%, and completed dispositions of $7.4 million at a weighted average cash capitalization rate of 9.2%.

Operating expenses

Depreciation and amortization

The decrease in depreciation and amortization for the three months ended March 31, 2025 was primarily due to $2.8 million of accelerated depreciation expense taken during the three months ended December 31, 2024.

Property and operating expense

The decrease in property and operating expenses for the three months ended March 31, 2025 was primarily due to a decrease in non-reimbursable property expenses for two properties that were re-leased and sold at the beginning of 2025 and end of 2024, respectively.

Provision for impairment of investment in rental properties

The following table presents the impairment charges for the respective periods:

During the three months ended March 31, 2025, we recognized $16.1 million of impairment primarily from changes in our long-term hold strategy with respect to the individual properties. Such impairments were based on actual and expected sales prices of individual properties and primarily included a $12.5 million impairment charge on two healthcare properties. The timing and amount of impairment fluctuates from period to period depending on the specific facts and circumstances.

Other income (expenses)

Gain on sale of real estate

Our recognition of a gain or loss on the sale of real estate varies from transaction to transaction based on fluctuations in asset prices and demand in the real estate market. During the three months ended March 31, 2025, we recognized a gain of $0.4 million on the sale of three properties, compared to a gain of $8.2 million on the sale of 12 properties during the three months ended December 31, 2024.

Other (expenses) income

The increase in other (expenses) income during the three months ended March 31, 2025 was primarily due to a $0.3 million unrealized foreign exchange loss recognized on the quarterly remeasurement of our $100 million Canadian Dollars (“CAD”) Revolving Credit Facility borrowings, compared to a $4.7 million unrealized foreign exchange gain recognized during the three months ended December 31, 2024.

Net income and Net earnings per diluted share

The decrease in net income is primarily attributable to a $7.8 million decrease in the gain on sale of real estate, a $5.2 million increase in other (expense) income, and a $3.4 million decrease in lease revenues, net. This was partially offset by a $3.5 million decrease in depreciation and amortization, a $1.6 million decrease in the provision for impairment of investment in rental properties, and a $1.3 million decrease in property and operating expenses.

GAAP net income includes items such as gain or loss on sale of real estate and provisions for impairment, among others, which can vary from quarter to quarter and impact period-over-period comparisons.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Lease revenues, net

The increase in Lease revenues, net was primarily attributable to growth in our real estate portfolio. Subsequent to the first quarter of 2024, we had a total of $234.3 million of acquisitions at a cash capitalization rate of 7.3% and had a $201.0 million build-to-suit development reach stabilization at a cash capitalization rate of 7.2%. Additionally, during the three months ended March 31, 2025, we completed investments of $61.8 million in acquisitions and revenue generating capital expenditures at a weighted average cash capitalization rate of 7.2%. This stabilized investment activity is partially offset by 2024 disposition activity of $308.3 million at a weighted average cash capitalization rate of 7.8%, and dispositions during the three months ended March 31, 2025 of $7.4 million at a weighted average cash capitalization rate of 9.2%.

Operating expenses

Depreciation and amortization

The increase in depreciation and amortization for the three months ended March 31, 2025 was primarily due to timing and amount of net investment activity during 2024 and during the first quarter of 2025 compared to the first quarter of 2024.

Provision for impairment of investment in rental properties

The following table presents the impairment charges for the respective periods:

During the three months ended March 31, 2025, we recognized $16.1 million of impairment primarily from changes in our long-term hold strategy with respect to the individual properties. Such impairments were based on actual and expected sales prices of individual properties and primarily included a $12.5 million impairment charge on two healthcare properties. The timing and amount of impairment fluctuates from period to period depending on the specific facts and circumstances.

Other income (expenses)

Interest expense

The increase in interest expense is primarily a result of a $0.9 million decrease in capitalized interest related to our build-to-suit development projects due to a $97.6 million net decrease in property under development as of March 31, 2025 when compared to March 31, 2024. Property under development is expected to increase over the period of construction for each build-to-suit development. Additionally, interest expense has partially increased due to an increase in total borrowings on our variable-rate USD Revolving Credit Facility to fund acquisitions in the first quarter of 2025.

Gain on sale of real estate

Our recognition of a gain or loss on the sale of real estate varies from transaction to transaction based on fluctuations in asset prices and demand in the real estate market. During the three months ended March 31, 2025, we recognized a gain of $0.4 million on the sale of three properties, compared to a gain of $59.1 million on the sale of 37 properties during the three months ended March 31, 2024.

Other (expenses) income

The increase in other (expenses) income during the three months ended March 31, 2025 was primarily due to a $0.3 million foreign exchange loss recognized on the quarterly remeasurement of our $100 million Canadian Dollars (“CAD”) Revolving Credit Facility borrowings, compared to a $1.7 million unrealized foreign exchange gain recognized during the three months ended March 31, 2024.

Net income and Net earnings per diluted share

The decrease in net income is primarily due to a decrease in the gain on sale of real estate of $58.7 million, an increase in depreciation and amortization of $1.7 million, and an increase in interest expense of $1.5 million. These are offset by a decrease in the provision for impairment of investment in rental properties of $10.3 million and an increase in net lease revenues of $3.3 million.

GAAP net income includes items such as gain or loss on sale of real estate and provisions for impairment, among others, which can vary from quarter to quarter and impact period-over-period comparisons.