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, 2026 Compared to Three Months Ended March 31, 2026

Lease revenues, net

The increase in Lease revenues, net, during the three months ended June 30, 2026, was primarily attributable to receiving a full quarter of rents related to $61.2 million of real property acquisitions at a weighted average cash capitalization rate of 9.0% and the stabilization of two build-to-suit projects, including a $78.2 million build-to-suit development at a cash capitalization rate of 6.6%, and a $52.2 million build-to-suit development at a cash capitalization rate of 7.6% during the three months ended June 30, 2026. These increases in rent were partially offset by dispositions during prior periods and during the three months ended June 30, 2026.

Operating expenses

Depreciation and amortization

The increase in depreciation and amortization for the three months ended June 30, 2026 was primarily attributable to $6.2 million of accelerated depreciation recognized in connection with the demolition of a property being redeveloped, and growth in our real estate portfolio, including a full quarter of depreciation related to a build-to-suit project that stabilized, and a property acquired, during the first quarter of 2026, as well as two additional build-to-suit projects that stabilized during the three months ended June 30, 2026.

General and administrative

The increase in general and administrative expenses for the three months ended June 30, 2026 was primarily due to $1.6 million of transaction costs, including a deposit on land, related to a build-to-suit opportunity we decided not to pursue.

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, 2026, we recognized $3.5 million of impairment resulting primarily from changes in our long-term hold strategy with respect to the individual properties. Such impairments were based on actual sales prices of the individual properties. The timing and amount of impairment fluctuates from period to period depending on the specific facts and circumstances.

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 June 30, 2026, we recognized a gain of $13.0 million on the sale of three properties, compared to a gain of $7.1 million on the sale of one property during the three months ended March 31, 2026.

Net income and Net earnings per diluted share

The decrease in net income is primarily attributable to a $7.6 million increase in depreciation and amortization expense, a $3.5 million increase in provision for impairment of investment in rental properties, and a $1.5 million increase in general and administrative expenses. This was partially offset by a $5.9 million increase in gain on sale of real estate.

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, 2026 Compared to Six Months Ended June 30, 2025

Lease revenues, net

The increase in lease revenues, net was primarily attributable to growth in our real estate portfolio. Subsequent to the second quarter of 2025, we had a total of $384.2 million of acquisitions and revenue generating capital expenditures at a cash capitalization rate of 7.4%, and $184.4 million of build-to-suit developments reached stabilization at a weighted average cash capitalization rate of 7.1%. This stabilized investment activity was partially offset by disposition activity of $149.8 million at a weighted average cash capitalization rate of 6.5% on tenanted properties over the same period. Additionally, there were no write-offs of accrued rental income during the six months ended June 30, 2026. Write-offs of accrued rental income are discrete charges in a quarter related to collection probabilities and fluctuate quarter to quarter. Further, the increase in lease revenues, net was partially due to an increase in operating expenses billed to tenants, corresponding to the increase in reimbursable property and operating expenses over the same period. Lastly, the increase in lease revenues, net was partially due to net recoveries of bad debt during the six months ended June 30, 2026 compared to bad debt expense during the six months ended June 30, 2025.

Operating expenses

Depreciation and amortization

The increase in depreciation and amortization for the six months ended June 30, 2026 was primarily attributable to $6.2 million of accelerated depreciation recognized in connection with the demolition of a property being redeveloped, and due to timing and amount of net investment activity in our real estate portfolio as discussed above.

Property and operating expense

The increase in property and operating expense for the six months ended June 30, 2026 was primarily related to an increase in reimbursable expenses that are billed to tenants.

General and administrative

The increase in general and administrative expenses for the six months ended June 30, 2026 was primarily due to $1.6 million of transaction costs, including a deposit on land related to a build-to-suit opportunity we decided not to pursue, and an increase in stock-based compensation expense.

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, 2026, we recognized $3.5 million of impairment resulting primarily from changes in our long-term hold strategy with respect to the individual properties. Such impairments were based on actual sales prices of the individual properties. The timing and amount of impairment fluctuates from period to period depending on the specific facts and circumstances.

Interest expense

The increase in interest expense for the six months ended June 30, 2026 is primarily due to the completion of our $350.0 million 5.00% senior unsecured notes during the third quarter of 2025, the proceeds of which were used to fund acquisitions and paydown the Revolving Credit Facility during 2025. Additionally, the increase in interest expense during the six months ended June 30, 2026 is due to increased borrowings on our variable-rate USD Revolving Credit Facility to fund investment activity.

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, 2026, we recognized a gain of $20.1 million on the sale of nine properties, compared to a gain of $1.0 million on the sale of 11 properties during the six months ended June 30, 2025.

The increase in other income during the six months ended June 30, 2026 was primarily due to a $2.7 million foreign exchange gain recognized on the quarterly remeasurement of our $100.0 million Canadian Dollars (“CAD”) Revolving Credit Facility borrowings, compared to a $3.7 million foreign exchange loss recognized during the six months ended June 30, 2025.

Net income and Net earnings per diluted share

The increase in net income is primarily due to a decrease in impairment charges of $24.5 million, an increase in net lease revenues of $22.0 million, an increase in the gain on sale of real estate of $19.1 million, and an increase in other income of $6.7 million. These are partially offset by an increase in interest expense of $9.9 million, an increase in depreciation and amortization of $8.6 million, an increase in general and administrative expenses of $3.0 million, and an increase in property and operating expenses of $1.5 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.