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, 2026 Compared to Three Months Ended June 30, 2026

Lease revenues, net

The decrease in Lease revenues, net, during the three months ended September 30, 2026, was primarily attributable to an increase in net write-offs of accrued rental income. Write-offs of accrued rental income are discrete charges based on our assessment of collectability and fluctuate from quarter to quarter. This decrease was partially offset by a $1.2 million increase in real estate taxes reimbursed by tenants, corresponding to the increase in reimbursable property and operating expenses as described below.

Operating expenses

Depreciation and amortization

The increase in depreciation and amortization for the three months ended September 30, 2026 was primarily attributable to $8.5 million of accelerated depreciation recognized from the reduction in the estimated remaining useful life of a property transitioned to redevelopment during the quarter. The increase is partially offset by $6.2 million of accelerated depreciation recognized in connection with the demolition of a redevelopment property during the three months ended June 30, 2026.

Property and operating expense

The increase in property and operating expense during the three months ended September 30, 2026 is primarily related to a $1.2 million increase in real estate taxes that are reimbursable by tenants. There is a corresponding increase in operating expenses billed to tenants as described above.

General and administrative

The decrease in general and administrative expenses for the three months ended September 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, during the three months ended June 30, 2026 that did not reoccur during the three months ended September 30, 2026.

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, 2026, we recognized $1.5 million of impairment resulting primarily from changes in our long-term hold strategy with respect to the individual properties. Such impairments were based on 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.

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, 2026, we recognized a gain of $3.6 million on the sale of three properties, compared to a gain of $13.0 million on the sale of nine properties during the three months ended June 30, 2026.

The decrease in Other income (expenses) during the three months ended September 30, 2026 was primarily due to a $0.1 million foreign exchange loss recognized on the quarterly remeasurement of our $100.0 million Canadian Dollars (“CAD”) Revolving Credit Facility borrowings, compared to a $1.3 million foreign exchange gain recognized during the three months ended June 30, 2026.

Net income and Net earnings per diluted share

The decrease in net income is primarily attributable to a $9.4 million decrease in gain on sale of real estate, a $2.9 million increase in net write-offs of accrued rental income, a $1.7 million increase in depreciation and amortization, and a $1.4 million decrease in foreign exchange gain. This was partially offset by a $2.1 million decrease in provision for impairment, and a $1.1 million decrease in general and administrative expenses.

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, 2026 Compared to Nine Months Ended September 30, 2025

Lease revenues, net

The increase in lease revenues, net was primarily attributable to growth in our real estate portfolio. Subsequent to the third quarter of 2025, we had a total of $303.0 million of acquisitions and revenue generating capital expenditures at a cash capitalization rate of 7.5%, and $276.2 million of build-to-suit developments reach stabilization at a weighted average cash capitalization rate of 7.7%. This stabilized investment activity was partially offset by disposition activity of $123.6 million at a weighted average cash capitalization rate of 6.3% on tenanted properties over the same period. Further, the increase in lease revenues, net was partially due to a $1.7 million increase in real estate taxes reimbursed by tenants, corresponding to the increase in reimbursable property and operating expenses described below. Additionally, the increase in lease revenues, net was partially due to net recoveries of bad debt during the nine months ended September 30, 2026 compared to bad debt expense during the nine months ended September 30, 2025. Interest income from sales-type leases increased $1.1 million over the comparable period resulting from the timing of a lease that was classified as sales-type in the third quarter of 2025.

The increase in lease revenues, net was partially due to an increase in interest income from sales-type leases compared to the nine months ended September 30, 2025.

Operating expenses

Depreciation and amortization

The increase in depreciation and amortization for the nine months ended September 30, 2026 was primarily attributable to $15.0 million of accelerated depreciation recognized from the reduction in the estimated remaining useful life of two properties transitioned to redevelopment and the 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 nine months ended September 30, 2026 was primarily related to a $1.7 million increase in real estate taxes reimbursed by tenants. As described above, there is a corresponding increase in operating expenses billed to tenants. The remaining increase is primarily from increases in reimbursable property management fees and demolition costs related to a redevelopment property.

General and administrative

The increase in general and administrative expenses for the nine months ended September 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 nine months ended September 30, 2026, we recognized $5.0 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 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.

Interest expense

The increase in interest expense for the nine months ended September 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 nine months ended September 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 nine months ended September 30, 2026, we recognized a gain of $23.7 million on the sale of 13 properties, compared to a gain of $4.2 million on the sale of 23 properties during the nine months ended September 30, 2025.

The increase in other income during the nine months ended September 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 $2.4 million foreign exchange loss recognized during the nine months ended September 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 $30.0 million, an increase in net lease revenues of $29.7 million, an increase in the gain on sale of real estate of $19.5 million, and an increase in other income of $5.3 million. These are partially offset by an increase in interest expense of $8.4 million, an increase in depreciation and amortization of $19.1 million, an increase in general and administrative expenses of $3.8 million, and an increase in property and operating expenses of $2.7 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.