Broadstone Net Lease, Inc.

Results of Operations

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

Three Months Ended September 30, 2025 Compared to Three Months Ended June 30, 2025

Lease revenues, net

The increase in lease revenues, net, was primarily attributable to increase in rents related to real property acquisitions and investments in revenue generating capital expenditures during the three months ended September 30, 2025, partially offset by dispositions. We closed on $145.0 million of acquisitions and revenue generating capital expenditures at a weighted average cash capitalization rate of 7.1%, and completed dispositions of $38.7 million at a weighted average cash capitalization rate of 7.0% during the three months ended September 30, 2025.

Operating expenses

Depreciation and amortization

The decrease in depreciation and amortization for the three months ended September 30, 2025 was primarily due to $4.7 million of accelerated amortization of intangible lease assets resulting from an early lease termination during the three months ended June 30, 2025 that did not reoccur during the three months ended September 30, 2025.

Property and operating expense

The increase in property and operating expense during the three months ended September 30, 2025 is primarily related to an increase in reimbursable expenses that are billed to tenants.

Provision for impairment of investment in rental properties

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

During the three months ended September 30, 2025, we recognized $7.0 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 September 30, 2025 is primarily due to the termination of interest rate swap agreements with an aggregate termination value of $6.7 million, resulting in $6.1 million of accumulated losses held in Other comprehensive income (loss) to be reclassified to interest expense.

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 September 30, 2025, we recognized a gain of $3.3 million on the sale of 12 properties, compared to a gain of $0.6 million on the sale of eight properties during the three months ended June 30, 2025.

Other (expenses) income

The increase in other (expenses) income during the three months ended September 30, 2025 was primarily due to a $1.3 million unrealized foreign exchange gain recognized on the quarterly remeasurement of our $100 million Canadian Dollars (“CAD”) Revolving Credit Facility borrowings, compared to a $3.4 million unrealized foreign exchange loss recognized during the three months ended June 30, 2025.

Net income and Net earnings per diluted share

The increase in net income is primarily attributable to a $4.9 million decrease in the provision for impairment of investment in rental properties, a $4.8 million decrease in unrealized foreign exchange loss, a $2.3 million decrease in depreciation and amortization expense, and a $2.7 million gain on sale of real estate. This was partially offset by a $7.1 million increase in interest expense primarily related to termination of interest rate swap agreements.

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.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Lease revenues, net

The increase in lease revenues, net was primarily attributable to growth in our real estate portfolio. During the first three quarters of 2025, we had a total of $253.2 million of acquisitions at a cash capitalization rate of 7.1%, $8.3 million of revenue generating capital expenditures at a weighted average cash capitalization rate of 8.3%, 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 $59.2 million at a weighted average cash capitalization rate of 7.7%. 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 nine months ended September 30, 2025 was primarily due to timing and amount of net investment activity during 2024 and during the first three quarters of 2025 compared to the first three quarters of 2024.

Provision for impairment of investment in rental properties

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

During the nine months ended September 30, 2025, we recognized $35.1 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.

Property and operating expense

The decrease in property and operating expenses for the nine months ended September 30, 2025 was primarily due to a decrease in non-reimbursable expenses related to two properties that were re-leased and sold at the beginning of 2025, and end of 2024, respectively.

General and administrative

The increase in general and administrative expenses for the nine months ended September 30, 2025 was primarily due to an increase in stock based compensation expense of $1.7 million, partially offset by a decrease in corporate expenses compared to the nine months ended September 30, 2024.

Other income (expenses)

Interest expense

The increase in interest expense for the nine months ended September 30, 2025 is primarily due to the termination of interest rate swap agreements with an aggregate termination value of $6.7 million, which resulted in $6.1 million of accumulated losses held in Other comprehensive income (loss) to Interest expense. 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 of term debt outstanding, the proceeds of which were used to fund acquisitions in the first three 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 nine months ended September 30, 2025, we recognized a gain of $4.2 million on the sale of 23 properties, compared to a gain of $65.0 million on the sale of 46 properties during the nine months ended September 30, 2024.

Other (expenses) income

The increase in other (expenses) income during the nine months ended September 30, 2025 was primarily due to a $2.4 million foreign exchange loss recognized on the quarterly remeasurement of our $100 million Canadian Dollars (“CAD”)

Revolving Credit Facility borrowings, compared to a $1.5 million unrealized foreign exchange gain recognized during the nine months ended September 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 $60.7 million, an increase in interest expense of $14.9 million, and an increase in depreciation and amortization of $9.1 million. These are offset by an increase in net lease revenues of $16.2 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.