Broadstone Net Lease, Inc.

Results of Operations

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

Three Months Ended June 30, 2025 Compared to Three Months Ended March 31, 2025

Lease revenues, net

The increase in lease revenues, net, was primarily attributable to a $2.2 million write-off of accrued rental income that occurred for the three months ended March 31, 2025 but did not occur during the three months ended June 30, 2025. Write-offs of accrued rental income are discrete charges in a quarter related to collection probabilities and fluctuate quarter to quarter. Additionally, there was an increase in rents related to real property acquisitions during the three months ended June 30, 2025, partially offset by dispositions. We closed on investments of $54.7 million of acquisitions at a weighted average cash capitalization rate of 7.1%, and completed dispositions of $13.1 million at a weighted average cash capitalization rate of 9.5% during the three months ended June 30, 2025.

Operating expenses

Depreciation and amortization

The increase in depreciation and amortization for the three months ended June 30, 2025 was primarily due to growth in our real estate portfolio.

Provision for impairment of investment in rental properties

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

During the three months ended June 30, 2025, we recognized $11.9 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 the individual 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 for the three months ended June 30, 2025 is primarily due to an increase in total borrowings on our variable-rate Revolving Credit Facility and an additional $100.0 million draw on the 2028 Unsecured Term Loan, all of which were used to fund acquisitions and developments.

Other (expenses) income

The increase in other (expenses) income during the three months ended June 30, 2025 was primarily due to a $3.4 million unrealized foreign exchange loss recognized on the quarterly remeasurement of our $100 million Canadian Dollars (“CAD”) Revolving Credit Facility borrowings, compared to a $0.3 million unrealized foreign exchange gain recognized during the three months ended March 31, 2025.

Net income and Net earnings per diluted share

The increase in net income is primarily attributable to a $4.3 million increase in lease revenues, net and a $4.2 million decrease in the provision for impairment of investment in rental properties. This was partially offset by a $3.1 million increase in unrealized foreign exchange loss, a $3.1 million increase in depreciation and amortization, and a $1.0 million increase in interest expense.

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

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Lease revenues, net

The increase in lease revenues, net was primarily attributable to growth in our real estate portfolio. During the first two quarters of 2025, we had a total of $113.7 million of acquisitions at a cash capitalization rate of 7.1%, $2.8 million of revenue generating capital expenditures at a weighted average cash capitalization rate of 8.0%, as well as had a $201.0 million build-to-suit development reach stabilization at a cash capitalization rate of 7.2%. This stabilized investment activity is partially offset by 2025 disposition activity of $20.5 million at a weighted average cash capitalization rate of 9.4%. Additionally, the increase in lease revenues, net was partially due to a decrease in bad debt expense related to the sale of a healthcare asset and collection efforts on outstanding rent.

Operating expenses

Depreciation and amortization

The increase in depreciation and amortization for the six months ended June 30, 2025 was primarily due to timing and amount of net investment activity during 2024 and during the first two quarters of 2025 compared to the first two quarters of 2024.

Provision for impairment of investment in rental properties

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

During the six months ended June 30, 2025, we recognized $28.1 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 the individual properties and primarily included a $14.6 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 $1.5 million decrease in capitalized interest related to our build-to-suit development projects due to a $48.4 million net decrease in property under development as of June 30, 2025 when compared to June 30, 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 Revolving Credit Facility and additional $100.0 million draw on the 2028 Unsecured Term Loan to fund acquisitions in the first two quarters 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 six months ended June 30, 2025, we recognized a gain of $1.0 million on the sale of 11 properties, compared to a gain of $62.5 million on the sale of 40 properties during the six months ended June 30, 2024.

Other (expenses) income

The increase in other (expenses) income during the six months ended June 30, 2025 was primarily due to a $3.7 million foreign exchange loss recognized on the quarterly remeasurement of our $100 million Canadian Dollars (“CAD”) Revolving Credit Facility borrowings, compared to a $2.4 million unrealized foreign exchange gain recognized during the six months ended June 30, 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 $61.5 million, an increase in depreciation and amortization of $6.9 million, and an increase in interest expense of $4.9 million. These are offset by an increase in net lease revenues of $10.4 million and a decrease in the provision for impairment of investment in rental properties of $2.2 million.

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