Broadstone Net Lease, Inc 10-Q for FY2025 Q3
Broadstone Net Lease, Inc. (BNL)
10-Q
2025-10-29
For: 2025-09-30
View Original
Added on
April 09, 2026
About this 10-Q
Broadstone Net Lease, Inc filed this 10-Q on October 29, 2025, covering the quarter ended September 30, 2025 (FY2025 Q3).
Headline figures
Quarter ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $114.17M
- up 5.3% from $108.4M a year earlier
- Net income
- $26.47M
- down 25.7% from net income of $35.61M a year earlier
- Diluted EPS
- $0.14
- down 26.3% from $0.19 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________
FORM 10-Q
____________________________________________________
| Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the quarterly period ended September 30, 2025
| Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
Commission File Number 001-39529
____________________________________________________
(Exact name of registrant as specified in its charter)
____________________________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
(585 ) 287-6500
(Registrant’s telephone number, including area code)
____________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | o | ||||||||||||
| Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
There were 189,216,037 shares of the Registrants’ Common Stock, $0.00025 par value per share, outstanding as of October 27, 2025.
BROADSTONE NET LEASE, INC.
TABLE OF CONTENTS
| Page | ||||||||
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Broadstone Net Lease, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except per share amounts)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Accounted for using the operating method: | |||||||||||
| Land | $ | $ | |||||||||
| Land improvements | |||||||||||
| Buildings and improvements | |||||||||||
| Equipment | |||||||||||
| Total accounted for using the operating method | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| Accounted for using the operating method, net | |||||||||||
| Accounted for using the direct financing method | |||||||||||
| Accounted for using the sales-type method | |||||||||||
| Property under development | |||||||||||
| Investment in rental property, net | |||||||||||
| Cash and cash equivalents | |||||||||||
| Accrued rental income | |||||||||||
| Tenant and other receivables, net | |||||||||||
| Prepaid expenses and other assets | |||||||||||
| Interest rate swap, assets | |||||||||||
| Goodwill | |||||||||||
| Intangible lease assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and equity | |||||||||||
| Unsecured revolving credit facility | $ | $ | |||||||||
| Mortgages, net | |||||||||||
| Unsecured term loans, net | |||||||||||
| Senior unsecured notes, net | |||||||||||
| Interest rate swap, liabilities | |||||||||||
| Accounts payable and other liabilities | |||||||||||
| Dividends payable | |||||||||||
| Accrued interest payable | |||||||||||
| Intangible lease liabilities, net | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 16) | |||||||||||
| Equity | |||||||||||
| Broadstone Net Lease, Inc. equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Cumulative distributions in excess of retained earnings | ( | ( | |||||||||
| Accumulated other comprehensive income | |||||||||||
| Total Broadstone Net Lease, Inc. equity | |||||||||||
| Non-controlling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Broadstone Net Lease, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
(in thousands, except per share amounts)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Lease revenues, net | $ | $ | $ | $ | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Property and operating expense | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Provision for impairment of investment in rental properties | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Other income (expenses) | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Gain on sale of real estate | |||||||||||||||||||||||
| Income taxes | ( | ( | ( | ||||||||||||||||||||
| Other income (expenses) | ( | ( | |||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income attributable to non-controlling interests | ( | ( | ( | ( | |||||||||||||||||||
| Net income attributable to Broadstone Net Lease, Inc. | |||||||||||||||||||||||
| Weighted average number of common shares outstanding | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net earnings per share attributable to common stockholders | |||||||||||||||||||||||
| Basic and Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Comprehensive income (loss) | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss) | |||||||||||||||||||||||
| Change in fair value of interest rate swaps | ( | ( | ( | ( | |||||||||||||||||||
| Realized loss (gain) on interest rate swaps | ( | ||||||||||||||||||||||
| Comprehensive income (loss) | ( | ||||||||||||||||||||||
| Comprehensive income (loss) attributable to non-controlling interests | ( | ( | |||||||||||||||||||||
| Comprehensive income (loss) attributable to Broadstone Net Lease, Inc. | $ | $ | ( | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Broadstone Net Lease, Inc. and Subsidiaries
Condensed Consolidated Statements of Equity
(Unaudited)
(in thousands, except per share amounts)
| Common Stock | Additional Paid-in Capital | Cumulative Distributions in Excess of Retained Earnings | Accumulated Other Comprehensive Income | Non- controlling Interests | Total Equity | ||||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of | — | — | — | — | |||||||||||||||||||||||||||||||
| Offering costs, discounts, and commissions | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation, net of | — | — | — | — | |||||||||||||||||||||||||||||||
Retirement of | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Conversion of | — | — | — | ( | |||||||||||||||||||||||||||||||
Distributions declared ($ | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||
| Change in fair value of interest rate swap agreements | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||
| Realized gain on interest rate swap agreements | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Adjustment to non-controlling interests | — | — | ( | ( | |||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | ( | |||||||||||||||||||||||||||||||
Issuance of | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Contributions from non-controlling interests | — | — | — | — | |||||||||||||||||||||||||||||||
| Offering costs, discounts, and commissions | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation, net of | — | — | — | — | |||||||||||||||||||||||||||||||
Distributions declared ($ | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||
| Change in fair value of interest rate swap agreements | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||
| Realized gain on interest rate swap agreements | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Adjustment to non-controlling interests | — | — | ( | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Contributions from non-controlling interests | — | — | — | — | |||||||||||||||||||||||||||||||
| Offering costs, discounts, and commissions | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation, net of | — | — | — | — | |||||||||||||||||||||||||||||||
Conversion of | — | — | — | ( | |||||||||||||||||||||||||||||||
Distributions declared ($ | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||
| Change in fair value of interest rate swap agreements | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||
| Realized loss on interest rate swap agreements | — | — | — | ||||||||||||||||||||||||||||||||
| Adjustment to non-controlling interests | — | ( | — | ||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Broadstone Net Lease, Inc. and Subsidiaries
Condensed Consolidated Statements of Equity - Continued
(Unaudited)
(in thousands, except per share amounts)
| Common Stock | Additional Paid-in Capital | Cumulative Distributions in Excess of Retained Earnings | Accumulated Other Comprehensive Income | Non- controlling Interests | Total Equity | ||||||||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of | — | — | — | — | |||||||||||||||||||||||||||||||
| Offering costs, discounts, and commissions | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation, net of | — | — | — | — | |||||||||||||||||||||||||||||||
Retirement of | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Conversion of | — | — | — | ( | |||||||||||||||||||||||||||||||
Distributions declared ($ | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||
| Change in fair value of interest rate swap agreements | — | — | — | ||||||||||||||||||||||||||||||||
| Realized loss on interest rate swap agreements | — | — | — | ||||||||||||||||||||||||||||||||
| Adjustment to non-controlling interests | — | — | ( | ( | |||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Offering costs, discounts, and commissions | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Contributions from non-controlling interests | — | — | — | — | |||||||||||||||||||||||||||||||
Stock-based compensation, net of | — | — | — | — | |||||||||||||||||||||||||||||||
Conversion of | — | — | — | ( | |||||||||||||||||||||||||||||||
Distributions declared ($ | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||
| Change in fair value of interest rate swap agreements | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||
| Realized loss on interest rate swap agreements | — | — | — | ||||||||||||||||||||||||||||||||
| Adjustment to non-controlling interests | — | ( | — | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | ( | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Offering costs, discounts, and commissions | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation, net of | — | — | — | — | |||||||||||||||||||||||||||||||
Conversion of | — | — | — | ( | |||||||||||||||||||||||||||||||
Distributions declared ($ | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||
| Change in fair value of interest rate swap agreements | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||
| Realized gain on interest rate swap agreements | — | — | — | ( | ( | ||||||||||||||||||||||||||||||
| Adjustment to non-controlling interests | — | — | ( | ||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Broadstone Net Lease, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
| For the Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization including intangibles associated with investment in rental property | |||||||||||
| Provision for impairment of investment in rental properties | |||||||||||
| Amortization of debt issuance costs and original issuance discount charged to interest expense | |||||||||||
| Stock-based compensation expense | |||||||||||
| Settlement of interest rate swaps | ( | ||||||||||
| Straight-line rent, direct financing and sales-type lease adjustments | ( | ( | |||||||||
| Gain on sale of real estate | ( | ( | |||||||||
| Other non-cash items | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Tenant and other receivables | ( | ( | |||||||||
| Prepaid expenses and other assets | ( | ||||||||||
| Accounts payable and other liabilities | ( | ||||||||||
| Accrued interest payable | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities | |||||||||||
| Acquisition of rental property | ( | ( | |||||||||
Investment in property under development including capitalized interest of $ | ( | ( | |||||||||
| Capital expenditures and improvements | ( | ( | |||||||||
| Proceeds from disposition of rental property, net | |||||||||||
| Change in deposits on investments in rental property | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities | |||||||||||
| Offering costs, discounts, and commissions | ( | ( | |||||||||
| Contributions from non-controlling interests | |||||||||||
| Proceeds from unsecured term loans and senior unsecured notes | |||||||||||
| Principal payments on mortgages and unsecured term loans | ( | ( | |||||||||
| Borrowings on unsecured revolving credit facility | |||||||||||
| Repayments on unsecured revolving credit facility | ( | ( | |||||||||
| Cash distributions paid to stockholders | ( | ( | |||||||||
| Cash distributions paid to non-controlling interests | ( | ( | |||||||||
| Debt acquisition costs paid | ( | ||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | ( | ||||||||||
| Cash and cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | $ | |||||||||
| Reconciliation of cash and cash equivalents and restricted cash | |||||||||||
| Cash and cash equivalents at beginning of period | $ | $ | |||||||||
| Restricted cash at beginning of period | |||||||||||
| Cash and cash equivalents and restricted cash at beginning of period | $ | $ | |||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Restricted cash at end of period | |||||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Broadstone Net Lease, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements (Unaudited)
1. Business Description
Broadstone Net Lease, Inc. (the “Corporation”) is a Maryland corporation formed on October 18, 2007, that elected to be taxed as a real estate investment trust (“REIT”) commencing with the taxable year ended December 31, 2008. Broadstone Net Lease, LLC (the Corporation’s operating company, or the “OP”), is the entity through which the Corporation conducts its business and owns (either directly or through subsidiaries) all of the Corporation’s properties. The Corporation is the sole managing member of the OP. The membership units not owned by the Corporation are referred to as “OP Units” and are recorded as non-controlling interests in the Condensed Consolidated Financial Statements. As the Corporation conducts substantially all of its operations through the OP, it is structured as an umbrella partnership real estate investment trust (“UPREIT”). The Corporation’s common stock is listed on the New York Stock Exchange under the symbol “BNL.” The Corporation, the OP, and its consolidated subsidiaries are collectively referred to as the “Company.”
The Company is an industrial-focused, diversified net lease REIT that focuses on investing in income-producing, single-tenant net leased commercial properties, primarily in the United States. The Company leases primarily industrial and retail commercial properties under long-term lease agreements. At September 30, 2025, the Company owned a diversified portfolio of 759 individual commercial properties with 752 properties located in 44 U.S. states and seven properties located in four Canadian provinces.
The following table summarizes the outstanding equity and economic ownership interest of the Company:
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||
| Shares of Common Stock | OP Units | Total Diluted Shares | Shares of Common Stock | OP Units | Total Diluted Shares | ||||||||||||||||||||||||||||||
| Ownership interest | |||||||||||||||||||||||||||||||||||
| Percent ownership of OP | % | % | % | % | % | % | |||||||||||||||||||||||||||||
Refer to Note 14 for further discussion regarding the calculation of weighted average shares outstanding.
2. Summary of Significant Accounting Policies
Interim Information
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting) and Article 10 of the Securities and Exchange Commission’s (“SEC”) Regulation S-X. Accordingly, the Company has omitted certain footnote disclosures which would substantially duplicate those contained within the audited consolidated financial statements for the year ended December 31, 2024, included in the Company’s 2024 Annual Report on Form 10-K, filed with the SEC on February 20, 2025. Therefore, the readers of this quarterly report should refer to those audited consolidated financial statements, specifically Note 2, Summary of Significant Accounting Policies, for further discussion of significant accounting policies and estimates. The Company believes all adjustments necessary for a fair presentation have been included in these interim Condensed Consolidated Financial Statements (which include only normal recurring adjustments).
Basis of Accounting
The Condensed Consolidated Financial Statements have been prepared in accordance with GAAP.
Principles of Consolidation
The Condensed Consolidated Financial Statements include the accounts and operations of the Company. All intercompany balances and transactions have been eliminated in consolidation.
6
When the Company obtains an economic interest in an entity, the entity is evaluated to determine if it should be deemed a variable interest entity (“VIE”) and, if so, whether the Company is the primary beneficiary and is therefore required to consolidate the entity. The accounting guidance for consolidation of VIEs is applied to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Certain decision-making rights within a loan or joint-venture agreement may cause us to consider an entity a VIE. The contractual arrangements in a partnership agreement or other related contracts are reviewed to determine whether the entity is a VIE, and if the Company has variable interests in the VIE. The Company’s variable interests are then compared to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE. A primary beneficiary: (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company reassesses the initial evaluation of whether an entity is a VIE when certain events occur, and reassesses the primary beneficiary determination of a VIE on an ongoing basis based on current facts and circumstances. To the extent the Company has a variable interest in entities that are not evaluated under the VIE model, the Company evaluates its interests using the voting interest entity model.
The Corporation has complete responsibility for the day-to-day management of, authority to make decisions for, and control of the OP. Based on consolidation guidance, the Corporation has concluded that the OP is a VIE as the members in the OP do not possess kick-out rights or substantive participating rights. Accordingly, the Corporation consolidates its interest in the OP. However, because the Corporation holds the majority voting interest in the OP and certain other conditions are met, it qualifies for the exemption from providing certain disclosure requirements associated with investments in VIEs.
From time to time, the Company acquires properties using a reverse like-kind exchange structure pursuant to Section 1031 of the Internal Revenue Code (a “reverse 1031 exchange”) and, as such, the properties are in the possession of an Exchange Accommodation Titleholder (“EAT”) until the reverse 1031 exchange is completed. EATs are classified as VIEs as they are “thinly capitalized” entities. The Company consolidates the EAT because it is the primary beneficiary as it has the ability to control the activities that most significantly impact the EAT's economic performance and can collapse the reverse 1031 exchange structure at its discretion. The assets of the EAT primarily consist of leased property (net real estate investment in rental property and lease intangibles).
The portions of a consolidated entity not owned by the Company are presented as non-controlling interests as of and during the periods presented.
7
The following table presents a summary of selected financial data of the consolidated VIEs included in the Condensed Consolidated Balance Sheets:
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Assets | |||||||||||
| Accounted for using the operating method: | |||||||||||
| Land | $ | $ | |||||||||
| Land improvements | |||||||||||
| Buildings and improvements | |||||||||||
| Total accounted for using the operating method | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| Accounted for using the operating method, net | |||||||||||
| Property under development | |||||||||||
| Investment in rental property, net | |||||||||||
| Intangible lease assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Intangible lease liabilities, net | $ | ( | $ | ||||||||
| Other liabilities | ( | ||||||||||
| Total liabilities | $ | ( | $ | ||||||||
Use of Estimates
The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Accordingly, actual results may differ from those estimates.
Investment in Property Under Development
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Development, construction and improvement costs | $ | $ | |||||||||
| Capitalized interest | |||||||||||
| Property under development | $ | $ | |||||||||
| (in thousands) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Investment in properties under development, excluding capitalized costs | $ | $ | $ | $ | |||||||||||||||||||
| Capital expenditures funded after substantial completion | |||||||||||||||||||||||
8
Long-lived Asset Impairment
The Company reviews long-lived assets to be held and used for possible impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If, and when, such events or changes in circumstances are present, an impairment exists to the extent the carrying value of the long-lived asset or asset group exceeds the sum of the undiscounted cash flows expected to result from the use of the long-lived asset or asset group and its eventual disposition. Such cash flows include expected future operating income, as adjusted for trends and prospects, as well as the effects of demand, competition, and other factors. An impairment loss is measured as the amount by which the carrying amount of the long-lived asset or asset group exceeds its fair value. Significant judgment is made to determine if and when impairment should be taken. The Company’s assessment of impairment during the nine months ended September 30, 2025 and 2024, was based on the most current information available to the Company. Certain of the Company’s properties may have fair values less than their carrying amounts. However, based on the Company’s plans with respect to each of those properties, the Company believes that their carrying amounts are recoverable and therefore, no impairment charges were recognized other than those described below. If the operating conditions mentioned above deteriorate or if the Company’s expected holding period for assets changes, subsequent tests for impairment could result in additional impairment charges in the future.
Inputs used in establishing fair value for impaired real estate assets generally fall within Level 3 of the fair value hierarchy, which are characterized as requiring significant judgment as little or no current market activity may be available for validation. The main indicator used to establish the classification of the inputs is current market conditions, as derived through the use of published commercial real estate market information and information obtained from brokers and other third party sources. The Company determines the valuation of impaired assets using generally accepted valuation techniques including discounted cash flow analysis, income capitalization, analysis of recent comparable sales transactions, actual sales negotiations, and bona fide purchase offers received from third parties. Management may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate.
The following table summarizes the Company’s impairment charges, resulting primarily from changes in the Company’s long-term hold strategy with respect to the individual properties:
| (in thousands, except number of properties) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Number of properties | | | |||||||||||||||||||||
| Impairment charge | $ | $ | $ | $ | |||||||||||||||||||
During the three and nine months ended September 30, 2025, the Company recognized impairment of $7.0 million and $35.1 million, respectively, resulting from changes in the Company’s long-term hold strategy with respect to the individual properties. The impairments for the nine months ended September 30, 2025 were based on actual and expected sales prices of individual properties and primarily includes a $14.6 million impairment charge on two healthcare properties. During the three and nine months ended September 30, 2024, the Company recognized impairment of $1.1 million and $31.3 million, respectively. The impairments for the nine months ended September 30, 2024, primarily includes an $18.1 million impairment charge on two healthcare properties, which was based on expected sales prices of the properties, and an $11.2 million impairment charge on 11 healthcare properties sold as part of a portfolio with a gain of $59.1 million, excluding any impairment, which was based on actual sales prices of the individual properties.
Restricted Cash
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Escrow funds and other | $ | $ | |||||||||
9
Rent Received in Advance
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Rent received in advance | $ | $ | |||||||||
Segment Reporting
The Company currently operates in a single reportable segment, which includes the acquisition, leasing, and ownership of net leased properties. The Company’s chief operating decision maker (“CODM”) is the Company’s senior leadership team, which includes, the Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer and Treasurer, and the Company’s Senior Vice Presidents. The CODM assesses, measures, and reviews the operating and financial results at the consolidated level for the entire portfolio based on consolidated revenues, expenses, and net income as reported on the Condensed Consolidated Statements of Income and Comprehensive Income. The Company does not evaluate the results of operations based on geography, size, or property type.
Fair Value Measurements
Recurring Fair Value Measurements
The balances of financial instruments measured at fair value on a recurring basis are as follows (see Note 9):
| (in thousands) | September 30, 2025 | ||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Interest rate swap, assets | $ | $ | $ | $ | |||||||||||||||||||
| Interest rate swap, liabilities | ( | ( | |||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| (in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| Interest rate swap, assets | $ | $ | $ | $ | |||||||||||||||||||
Long-term Debt – The fair value of the Company’s debt was estimated using Level 1, Level 2, and Level 3 inputs based on secondary market trades of the Company’s 2031 Senior Unsecured Public Notes (see Note 7), recent comparable financing transactions, recent market risk premiums for loans of comparable quality, Secured Overnight Financing Rate (“SOFR”), Canadian Overnight Repo Rate Average (“CORRA”), U.S. Treasury obligation interest rates, and discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect the Company’s judgment as to the approximate current lending rates for loans or groups of loans with similar maturities and assumes that the debt is outstanding through maturity. Market information, as available, or present value techniques were utilized to estimate the amounts required to be disclosed. Since such amounts are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or other repayment restrictions that may exist on specific loans, it is unlikely that the estimated fair value of any such debt could be realized by immediate settlement of the obligation.
The following table summarizes the carrying amount reported in the Condensed Consolidated Balance Sheets and the Company’s estimate of the fair value of the unsecured revolving credit facility, mortgages, unsecured term loans, and senior unsecured notes which reflects the fair value of interest rate swaps:
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Carrying amount | $ | $ | |||||||||
| Fair value | |||||||||||
Non-recurring Fair Value Measurements
The Company’s non-recurring fair value measurements at September 30, 2025 and December 31, 2024 consisted of the fair value of impaired real estate assets that were determined using Level 3 inputs.
10
Right-of-Use Assets and Lease Liabilities
The Company is a lessee under non-cancelable operating and finance leases associated with its corporate headquarters and other office spaces as well as with leases of land (“ground leases”). The Company records right-of-use assets and lease liabilities associated with these leases. The lease liability is equal to the net present value of the future payments to be made under the lease, discounted using estimates based on observable market factors. The right-of-use asset is generally equal to the lease liability plus initial direct costs associated with the leases. The Company includes in the recognition of the right-of-use asset and lease liability those renewal periods that are reasonably certain to be exercised, based on the facts and circumstances that exist at lease inception. Amounts associated with percentage rent provisions are considered variable lease costs and are not included in the initial measurement of the right-of-use asset or lease liability. The Company has made an accounting policy election, applicable to all asset types, not to separate lease from nonlease components when allocating contract consideration related to operating leases.
Right-of-use assets and lease liabilities associated with operating and finance leases were included in the accompanying Condensed Consolidated Balance Sheets as follows:
| (in thousands) | Financial Statement Presentation | September 30, 2025 | December 31, 2024 | ||||||||||||||
| Operating leases: | |||||||||||||||||
| Prepaid expenses and other assets | $ | $ | |||||||||||||||
| Accounts payable and other liabilities | |||||||||||||||||
| Financing leases: | |||||||||||||||||
| Prepaid expenses and other assets | |||||||||||||||||
| Accounts payable and other liabilities | |||||||||||||||||
Refer to Note 16 for obligations under operating and finance leases.
Rental Expense
Rental expense associated with operating leases is recorded on a straight-line basis over the term of each lease, for leases that have fixed and measurable rent escalations. The difference between rental expense incurred on a straight-line basis and the cash rental payments due under the provisions of the lease is recorded as part of the right-of-use asset in the accompanying Condensed Consolidated Balance Sheets. Rental expense associated with finance leases is recorded as interest expense on the lease liability and amortization expense on the right-of-use asset. Amounts associated with percentage rent provisions based on the achievement of sales targets are recognized as variable rental expense when achievement of the sales targets are considered probable. Ground lease expense for properties that are under development by the Company are capitalized to property under development until the development reaches substantial completion.
Recently Issued Accounting Standards
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires a public entity to disclose additional information about specific expense categories in the notes to financial statements on an annual and interim basis. The amendments are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company will have the election to apply the amendments either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. While this update will result in enhanced disclosures, the Company does not expect it will have a material impact on the Company’s financial statements.
11
3. Acquisitions of Rental Property
The Company closed on the following acquisitions during the nine months ended September 30, 2025:
| (in thousands, except number of properties) | Property Type | Number of Properties | Real Estate Acquisition Price | ||||||||||||||||||||
| Date | |||||||||||||||||||||||
| January 28, 2025 | Retail | $ | |||||||||||||||||||||
| February 13, 2025 | Retail | (a) | |||||||||||||||||||||
| March 11, 2025 | Industrial | ||||||||||||||||||||||
| March 28, 2025 | Retail | ||||||||||||||||||||||
| April 24, 2025 | Industrial | (a) | |||||||||||||||||||||
| May 16, 2025 | Industrial | ||||||||||||||||||||||
| June 4, 2025 | Industrial | (b) | |||||||||||||||||||||
| June 5, 2025 | Retail | (a) | |||||||||||||||||||||
| June 12, 2025 | Industrial | (a) | |||||||||||||||||||||
| June 13, 2025 | Industrial | (c) | |||||||||||||||||||||
| July 1, 2025 | Retail | ||||||||||||||||||||||
| July 2, 2025 | Retail | ||||||||||||||||||||||
| August 1, 2025 | Industrial | (c) | |||||||||||||||||||||
| August 6, 2025 | Industrial | ||||||||||||||||||||||
| September 30, 2025 | Industrial | ||||||||||||||||||||||
| $ | (d) | ||||||||||||||||||||||
(a)Acquisition of land to be developed in connection with a build-to-suit development.
(b)Acquisition of land to be developed in connection with a build-to-suit development. In July 2025, the Company contributed these assets in exchange for common equity in a consolidated VIE (see Note 2).
(c)Acquisition of land by a consolidated VIE in connection with a build-to-suit development (see Note 2).
(d)Acquisition price excludes capitalized acquisition and development costs of $9.5 million.
The Company closed on the following acquisitions during the nine months ended September 30, 2024:
| (in thousands, except number of properties) | Property Type | Number of Properties | Real Estate Acquisition Price | ||||||||||||||||||||
| Date | |||||||||||||||||||||||
| April 4, 2024 | Retail | $ | (e) | ||||||||||||||||||||
| April 18, 2024 | Industrial & Retail | ||||||||||||||||||||||
| May 21, 2024 | Retail | ||||||||||||||||||||||
| May 30, 2024 | Industrial | ||||||||||||||||||||||
| June 6, 2024 | Industrial | ||||||||||||||||||||||
| June 24, 2024 | Retail | ||||||||||||||||||||||
| September 3, 2024 | Retail | ||||||||||||||||||||||
| September 5, 2024 | Industrial | ||||||||||||||||||||||
(f) | |||||||||||||||||||||||
(e)In April 2024, the Company acquired $52.0 million of real estate assets. In June 2024, the Company contributed these assets in exchange for preferred equity in a consolidated VIE (see Note 2).
(f)Acquisition price excludes capitalized acquisition costs of $2.5 million.
12
The Company allocated the purchase price of these properties to the fair value of the assets acquired and liabilities assumed. The following table summarizes the purchase price allocation for completed real estate acquisitions:
| (in thousands) | For the Nine Months Ended September 30, | ||||||||||
| 2025 | 2024 | ||||||||||
| Land | $ | $ | |||||||||
| Land improvements | |||||||||||
| Buildings and improvements | |||||||||||
| Property under development | |||||||||||
Acquired in-place leases (g) | |||||||||||
Acquired above-market leases (h) | |||||||||||
Acquired below-market leases (i) | ( | ( | |||||||||
| Right-of-use asset | |||||||||||
| Lease liability | ( | ||||||||||
| Prepaid expenses & other assets | |||||||||||
| $ | $ | ||||||||||
(g)The weighted average amortization period for acquired in-place leases is 12 years and 10 years for acquisitions completed during the nine months ended September 30, 2025 and 2024, respectively.
(h)The weighted average amortization period for the acquired above-market leases is 15 years and six years for acquisitions completed during the nine months ended September 30, 2025 and 2024, respectively.
(i)The weighted average amortization period for acquired below-market leases is 10 years and 9 years for acquisitions completed during the nine months ended September 30, 2025 and 2024, respectively.
The above acquisitions were funded using a combination of available cash on hand and unsecured revolving credit facility borrowings. All real estate acquisitions closed during the nine months ended September 30, 2025 and 2024 qualified as asset acquisitions and as such, acquisition costs were capitalized.
Subsequent to September 30, 2025, the Company closed on the following acquisitions (see Note 17):
| (in thousands, except number of properties) | Property Type | Number of Properties | Real Estate Acquisition Price | ||||||||||||||||||||
| Date | |||||||||||||||||||||||
| October 1, 2025 | Industrial | $ | |||||||||||||||||||||
| October 22, 2025 | Industrial | ||||||||||||||||||||||
| $ | |||||||||||||||||||||||
4. Sale of Real Estate
The Company closed on the following sales of real estate, none of which qualified as discontinued operations:
| (in thousands, except number of properties) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Number of properties disposed | |||||||||||||||||||||||
| Aggregate sale price | $ | $ | $ | $ | |||||||||||||||||||
| Aggregate carrying value | ( | ( | ( | ( | |||||||||||||||||||
| Additional sales expenses | ( | ( | ( | ( | |||||||||||||||||||
| Gain on sale of real estate | $ | $ | $ | $ | |||||||||||||||||||
13
5. Investment in Rental Property and Lease Arrangements
The Company primarily leases its investment rental property to established tenants in the industrial and retail property types. At September 30, 2025, the Company had 759 real estate properties, 746 of which were leased under leases that have been classified as operating leases, nine that have been classified as direct financing leases, one that has been classified as a sales-type lease, and three that were vacant. Of the nine leases classified as direct financing leases, three include land portions which are accounted for as operating leases. Most leases have initial terms of 10 20
Investment in Rental Property – Accounted for Using the Operating Method
Depreciation expense on investment in rental property was as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Depreciation | $ | $ | $ | $ | |||||||||||||||||||
Estimated lease payments to be received under non-cancelable operating leases with tenants at September 30, 2025 are as follows:
| (in thousands) | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| $ | |||||
Since lease renewal periods are exercisable at the option of the tenant, the above amounts only include future lease payments due during the initial lease terms. Such amounts exclude any potential variable rent increases that are based on changes in the CPI or future variable rents which may be received under the leases based on a percentage of the tenant’s gross sales. Additionally, certain of our leases provide tenants with the option to terminate their leases in exchange for termination penalties, or that are contingent upon the occurrence of a future event. Future lease payments within the table above have not been adjusted for these termination rights.
Investment in Rental Property – Direct Financing Leases
The Company’s net investment in direct financing leases was comprised of the following:
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Undiscounted estimated lease payments to be received | $ | $ | |||||||||
| Estimated unguaranteed residual values | |||||||||||
| Unearned revenue | ( | ( | |||||||||
| Reserve for credit losses | ( | ( | |||||||||
| Net investment in direct financing leases | $ | $ | |||||||||
14
Undiscounted estimated lease payments to be received under non-cancelable direct financing leases with tenants at September 30, 2025 are as follows:
| (in thousands) | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| $ | |||||
The above rental receipts do not include future lease payments for renewal periods, potential variable CPI rent increases, or variable percentage rent payments that may become due in future periods.
Investment in Rental Property – Sales-Type Leases
The Company’s $14.4 million net investment in a sales-type lease was comprised of one lease during the three months ended September 30, 2025. The lease has $17.4 million of undiscounted estimated lease payments to be received throughout the remaining lease term, which expires in 2027.
The following table summarizes amounts reported as Lease revenues, net in the Condensed Consolidated Statements of Income and Comprehensive Income:
| (in thousands) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Contractual rental amounts billed for operating leases | $ | $ | $ | $ | |||||||||||||||||||
Adjustment to recognize contractual operating lease billings on a straight-line basis | |||||||||||||||||||||||
| Net write-offs of accrued rental income | ( | ( | ( | ||||||||||||||||||||
| Variable rental amounts earned | |||||||||||||||||||||||
| Earned income from direct financing leases | |||||||||||||||||||||||
| Interest income from sales-type leases | |||||||||||||||||||||||
| Operating expenses billed to tenants | |||||||||||||||||||||||
| Other income from real estate transactions | |||||||||||||||||||||||
Adjustment to revenue recognized for uncollectible rental amounts billed, net | ( | ( | ( | ( | |||||||||||||||||||
| Total lease revenues, net | $ | $ | $ | $ | |||||||||||||||||||
15
6. Intangible Assets and Liabilities, and Leasing Fees
The following is a summary of intangible assets and liabilities, and leasing fees, and related accumulated amortization:
| (in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Lease intangibles: | |||||||||||
| Acquired above-market leases | $ | $ | |||||||||
| Less accumulated amortization | ( | ( | |||||||||
| Acquired above-market leases, net | |||||||||||
| Acquired in-place leases | |||||||||||
| Less accumulated amortization | ( | ( | |||||||||
| Acquired in-place leases, net | |||||||||||
| Total intangible lease assets, net | $ | $ | |||||||||
| Acquired below-market leases | $ | $ | |||||||||
| Less accumulated amortization | ( | ( | |||||||||
| Intangible lease liabilities, net | $ | $ | |||||||||
| Leasing fees | $ | $ | |||||||||
| Less accumulated amortization | ( | ( | |||||||||
| Leasing fees, net | $ | $ | |||||||||
Amortization of intangible lease assets and liabilities, and leasing fees was as follows:
| (in thousands) | Financial Statement Presentation | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| Intangible | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||
| Acquired in-place leases and leasing fees | Depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Above-market and below-market leases | Lease revenues, net | |||||||||||||||||||||||||||||||
For the three and nine months ended September 30, 2025, amortization of all intangible assets and liabilities includes $0.3 million and $5.3 million, respectively, of accelerated amortization resulting from early lease terminations. There was no
Estimated future amortization of intangible assets and liabilities, and leasing fees at September 30, 2025 is as follows:
| (in thousands) | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| $ | |||||
16
7. Unsecured Credit Agreements and Unsecured Notes
The following table summarizes the Company’s unsecured credit agreements and unsecured notes:
| Outstanding Balance | ||||||||||||||||||||||||||
| (in thousands, except interest rates) | September 30, 2025 | December 31, 2024 | Interest Rate | Maturity Date | ||||||||||||||||||||||
| Unsecured revolving credit facility | $ | $ | Applicable reference rate + | Mar. 2029 | (d) | |||||||||||||||||||||
| Unsecured term loans: | ||||||||||||||||||||||||||
| 2026 Unsecured Term Loan | one-month adjusted SOFR + | Feb. 2026 | (e) | |||||||||||||||||||||||
| 2027 Unsecured Term Loan | daily simple adjusted SOFR + | Aug. 2027 | ||||||||||||||||||||||||
| 2028 Unsecured Term Loan | one-month adjusted SOFR + | Mar. 2028 | (f) | |||||||||||||||||||||||
| 2029 Unsecured Term Loan | daily simple adjusted SOFR + | Aug. 2029 | ||||||||||||||||||||||||
| Total unsecured term loans | ||||||||||||||||||||||||||
| Unamortized debt issuance costs, net | ( | ( | ||||||||||||||||||||||||
| Total unsecured term loans, net | ||||||||||||||||||||||||||
| Senior unsecured notes: | ||||||||||||||||||||||||||
| 2027 Senior Unsecured Notes - Series A | Apr. 2027 | |||||||||||||||||||||||||
| 2028 Senior Unsecured Notes - Series B | Jul. 2028 | |||||||||||||||||||||||||
| 2030 Senior Unsecured Notes - Series C | Jul. 2030 | |||||||||||||||||||||||||
| 2031 Senior Unsecured Public Notes | Sep. 2031 | |||||||||||||||||||||||||
| 2032 Senior Unsecured Public Notes | Nov. 2032 | |||||||||||||||||||||||||
| Total senior unsecured notes | ||||||||||||||||||||||||||
| Unamortized debt issuance costs and original issuance discounts, net | ( | ( | ||||||||||||||||||||||||
| Total senior unsecured notes, net | ||||||||||||||||||||||||||
| Total unsecured debt, net | $ | $ | ||||||||||||||||||||||||
(a)At September 30, 2025 and December 31, 2024, a balance of $24.0 million and $23.5 million, respectively, was subject to daily simple SOFR. The remaining balance of $100.0 71.8 million United States Dollars (“USD”) and $69.5 million USD, at September 30, 2025 and December 31, 2024, respectively, and was subject to daily simple CORRA of 2.56 % and 3.32 % at September 30, 2025 and December 31, 2024, respectively.
(b)At September 30, 2025 and December 31, 2024, one-month SOFR was 4.13 % and 4.33 %, respectively.
(c)At September 30, 2025 and December 31, 2024, overnight SOFR was 4.24 % and 4.49 %, respectively.
(d)The Company’s unsecured revolving credit facility contains two six-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.0625 % of the revolving commitments.
(e)The 2026 Unsecured Term Loan was paid in full on February 28, 2025, with borrowings from the 2028 Unsecured Term Loan.
(f)The 2028 Unsecured Term Loan contains two twelve-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.125 % of the aggregate principal amount of the loans outstanding under the 2028 term loan facility.
At September 30, 2025, the weighted average interest rate on all outstanding borrowings was 4.72 % exclusive of interest rate swap agreements, and 4.09 % inclusive of interest rate swap agreements.
The Company is subject to various financial and operational covenants and financial reporting requirements pursuant to its unsecured credit agreements. These covenants require the Company to maintain certain financial ratios. As of September 30, 2025, and for all periods presented, the Company believes it was in compliance with all of its loan covenants. Failure to comply with the covenants would result in a default which, if the Company were unable to cure or obtain a waiver from the lenders, could accelerate the repayment of the obligations. Further, in the event of default, the Company may be restricted from paying dividends to its stockholders in excess of dividends required to maintain its REIT qualification. Accordingly, an event of default could have a material effect on the Company.
On September 26, 2025, the Company completed a public offering of $350.0 million 5.00 % senior unsecured notes due in 2032 (the "2032 Senior Unsecured Public Notes"), issued at 99.151 % of the principal amount. The 2032 Senior Unsecured Public Notes require semi-annual interest payments through the maturity date of November 1, 2032, unless earlier redeemed. The 2032 Senior Unsecured Public Notes can be redeemed by the Company at par within two months of the maturity date, or the Company can call the notes at any time for the principal, accrued interest, and a make-whole amount based upon the applicable government bond yield plus 20 basis points. The proceeds were used to repay borrowings on the unsecured revolving credit facility, to fund investments in real estate, and for general corporate purposes.
17
On February 28, 2025, the Company amended and restated the $1.0 billion unsecured revolving credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, to extend the maturity date of the unsecured revolving credit facility to March 31, 2029, and entered into a $500.0 million term loan agreement maturing on March 31, 2028 (the “2028 Unsecured Term Loan”). The Company borrowed $400.0 million of the available borrowings on the closing date and the remaining $100.0 million was funded during May 2025. Borrowings under the 2028 Unsecured Term Loan are subject to interest only payments at variable rates equal to adjusted SOFR plus a margin based on the Company’s credit rating, ranging between 0.800 % and 1.600 % per annum. Based on the Company’s current credit rating, the applicable margin was 0.950 % as of September 30, 2025. Proceeds from the loan were used to repay the $400.0 million 2026 Unsecured Term Loan in full and repay a portion of the unsecured revolving credit facility. The amended and restated agreement includes an accordion feature to increase the aggregate facility size from $1.5 billion to $2.5 billion, subject to the willingness of existing or new lenders to fund such increase and other customary conditions. All remaining terms of the unsecured revolving credit facility remained the same.
For each separate debt instrument, on a lender by lender basis, in accordance with ASC 470-50, Debt Modifications and Extinguishment, the Company performed an assessment of whether the transaction was deemed to be new debt, a modification of existing debt, or an extinguishment of existing debt. Debt issuance costs are either deferred and amortized over the term of the associated debt or expensed as incurred. With respect to the amended and restated unsecured credit agreement, the transaction was deemed to be a modification of debt.
For the three and nine months ended September 30, 2025, the Company incurred $6.3 million and $18.6 million, respectively, in debt issuance costs associated with the amended and restated unsecured credit agreement and 2032 Senior Unsecured Public Notes, which have been deferred and are being amortized over the term of the associated debt. The Company did not
Debt issuance costs and original issuance discounts are amortized as a component of Interest expense in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income. The following table summarizes debt issuance cost and original issuance discount amortization:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Debt issuance costs and original issuance discount amortization | $ | $ | $ | $ | |||||||||||||||||||
8. Mortgages
The Company’s mortgages consist of the following:
| (in thousands, except interest rates) | Origination Date | Maturity Date | Interest Rate | September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||
| Lender | |||||||||||||||||||||||||||||||||||
| Wilmington Trust National Association | Apr. 2019 | Feb. 2028 | $ | $ | (a) (b) (c) (d) | ||||||||||||||||||||||||||||||
| Wilmington Trust National Association | Jun. 2018 | Aug. 2025 | (a) (b) (c) (d) | ||||||||||||||||||||||||||||||||
| PNC Bank | Oct. 2016 | Nov. 2026 | (b) (c) | ||||||||||||||||||||||||||||||||
| Total mortgages | |||||||||||||||||||||||||||||||||||
| Debt issuance costs, net | ( | ( | |||||||||||||||||||||||||||||||||
| Mortgages, net | $ | $ | |||||||||||||||||||||||||||||||||
(a)Non-recourse debt includes the indemnification/guaranty of the Company pertaining to fraud, environmental claims, insolvency, and other matters.
(b)Debt secured by related rental property and lease rents.
(c)Debt secured by guaranty of the OP.
(d)Mortgage was assumed as part of the acquisition of the related property. The debt was recorded at fair value at the time of assumption.
At September 30, 2025, investment in rental property with a net book value of $81.4 million was pledged as collateral against the Company’s mortgages.
18
Estimated future principal payments to be made under the above mortgages and the Company’s unsecured credit agreements (see Note 7) at September 30, 2025 are as follows:
| (in thousands) | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| $ | |||||
Certain of the Company’s mortgages provide for prepayment fees and can be terminated under certain events of default as defined under the related agreements. These prepayment fees are not reflected as part of the table above.
9. Interest Rate Swaps
In connection with the issuance of the 2032 Senior Unsecured Public Notes in September 2025 and repayment of outstanding borrowings of variable rate debt indexed to the daily simple SOFR rate (see Note 7), the Company terminated interest rate swap agreements with an aggregate termination value of $6.7 million. The Company determined it is not probable the hedged forecasted transactions will occur during the original periods, and therefore the $6.1 300.0 million in connection with the issuance of the 2032 Senior Unsecured Public Notes. These interest rate swaps were terminated upon issuance of the 2032 Senior Unsecured Public Notes. The Company determined it is probable the hedged forecasted transaction will occur during the original periods, and therefore will amortize $0.6 million of accumulated losses held in Other comprehensive income (loss) over the original term of the swap agreement, which ends in August 2032.
19
The following is a summary of the Company’s outstanding interest rate swap agreements:
| (in thousands, except interest rates) | September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||
| Counterparty | Maturity Date | Fixed Rate | Variable Rate Index | Notional Amount | Fair Value | Notional Amount | Fair Value | |||||||||||||||||||||||||||||||||||||
Effective Swaps: (a) | ||||||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | January 2025 | daily compounded SOFR | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Truist Financial Corporation | April 2025 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | July 2025 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Truist Financial Corporation | July 2025 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Truist Financial Corporation | December 2025 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | January 2026 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | January 2026 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Capital One, National Association | January 2026 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Truist Financial Corporation | January 2026 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Capital One, National Association | April 2026 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Capital One, National Association | July 2026 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | December 2026 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | December 2026 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Toronto-Dominion Bank | March 2027 | daily compounded CORRA | (b) | (b) | ||||||||||||||||||||||||||||||||||||||||
| Wells Fargo Bank, N.A. | April 2027 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | December 2027 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Capital One, National Association | December 2027 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Wells Fargo Bank, N.A. | January 2028 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | May 2029 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Regions Bank | May 2029 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Regions Bank | June 2029 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| U.S. Bank National Association | June 2029 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Regions Bank | August 2029 | one-month SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Toronto-Dominion Bank | August 2029 | one-month SOFR | ||||||||||||||||||||||||||||||||||||||||||
| U.S. Bank National Association | August 2029 | one-month SOFR | ||||||||||||||||||||||||||||||||||||||||||
| U.S. Bank National Association | August 2029 | one-month SOFR | ||||||||||||||||||||||||||||||||||||||||||
| U.S. Bank National Association | August 2029 | daily compounded SOFR | ||||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | March 2030 | daily simple SOFR | (e) | |||||||||||||||||||||||||||||||||||||||||
| JPMorgan Chase Bank, N.A. | March 2030 | daily simple SOFR | (e) | |||||||||||||||||||||||||||||||||||||||||
| U.S. Bank National Association | June 2030 | daily simple SOFR | (e) | |||||||||||||||||||||||||||||||||||||||||
| Truist Financial Corporation | June 2030 | daily simple SOFR | (e) | |||||||||||||||||||||||||||||||||||||||||
| Manufacturers & Traders Trust Company | September 2030 | daily simple SOFR | (e) | |||||||||||||||||||||||||||||||||||||||||
| Regions Bank | September 2030 | daily simple SOFR | (e) | |||||||||||||||||||||||||||||||||||||||||
| Truist Financial Corporation | September 2030 | daily simple SOFR | (e) | |||||||||||||||||||||||||||||||||||||||||
| Regions Bank | March 2032 | daily compounded CORRA | (b) | (b) | ||||||||||||||||||||||||||||||||||||||||
| U.S. Bank National Association | March 2032 | daily compounded CORRA | (b) | (b) | ||||||||||||||||||||||||||||||||||||||||
| Bank of Montreal | March 2034 | daily compounded CORRA | (c) | (c) | ||||||||||||||||||||||||||||||||||||||||
Forward Starting Swaps: (a) (d) | ||||||||||||||||||||||||||||||||||||||||||||
| Toronto-Dominion Bank | December 2030 | daily simple SOFR | ( | |||||||||||||||||||||||||||||||||||||||||
| Regions Bank | December 2030 | daily simple SOFR | ( | |||||||||||||||||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||||||||||||||||||||
| Total Swaps | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
(a)The classification between “effective” and “forward starting” swaps is determined as of the most recent period presented.
(b)The contractual notional amount is $20.0
(c)The contractual notional amount is $40.0 million CAD.
(d)Forward starting swaps have effective dates that are five years prior to each respective maturity date.
(e)Interest rate swap was terminated in September 2025.
20
At September 30, 2025, the weighted average interest rate on all outstanding borrowings was 4.09 %, inclusive of a weighted average fixed rate on effective interest rate swaps of 2.30 %.
The total amounts recognized, and the location in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income, from converting from variable rates to fixed rates under these agreements were as follows:
| Amount of Loss Recognized in Accumulated Other Comprehensive Income | Reclassification from Accumulated Other Comprehensive Income | Total Interest Expense Presented in the Condensed Consolidated Statements of Income and Comprehensive Income | ||||||||||||||||||||||||
| (in thousands) | Location | Amount of (Loss) Gain | ||||||||||||||||||||||||
| For the Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | $ | Interest expense | $ | ( | $ | |||||||||||||||||||||
| 2024 | Interest expense | |||||||||||||||||||||||||
| Amount of Loss Recognized in Accumulated Other Comprehensive Income | Reclassification from Accumulated Other Comprehensive Income | Total Interest Expense Presented in the Condensed Consolidated Statements of Income and Comprehensive Income | ||||||||||||||||||||||||
| (in thousands) | Location | Amount of Gain | ||||||||||||||||||||||||
| For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | $ | Interest expense | $ | $ | ||||||||||||||||||||||
| 2024 | Interest expense | |||||||||||||||||||||||||
Amounts related to the interest rate swaps expected to be reclassified out of Accumulated other comprehensive income to Interest expense during the next twelve months are estimated to be a gain of $8.5 million.
10. Non-Controlling Interests
The following table summarizes OP Units exchanged for shares of common stock:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| OP Units exchanged for shares of common stock | |||||||||||||||||||||||
| Value of units exchanged | $ | $ | $ | $ | |||||||||||||||||||
11. Credit Risk Concentrations
The Company maintained bank balances that, at times, exceeded the federally insured limit during the nine months ended September 30, 2025. The Company has not experienced losses relating to these deposits and management does not believe that the Company is exposed to any significant credit risk with respect to these amounts based on the financial position and capitalization of the applicable banks.
For the nine months ended September 30, 2025 and 2024, the Company had no individual tenants or common franchises that accounted for more than 10% of Lease revenues, net, excluding lease termination fees.
21
12. Equity
At-the-Market Program (“ATM Program”)
The Company enters into ATM Programs through which it may, from time to time, publicly offer and sell shares of common stock. The Company’s ATM Programs also provide for forward sale agreements, enabling the Company to set the price of shares upon pricing the offering, while delaying the issuance of shares and the receipt of the net proceeds. During 2024, the Company replaced its prior $400.0 million ATM Program (“2021 ATM Program”) with a new $400.0 million ATM Program (“2024 ATM Program”), and the 2021 ATM Program was simultaneously terminated.
The following table presents information about the Company’s ATM Programs:
| (in thousands) | ||||||||||||||||||||
| Program Year | Program Size | Aggregate Gross Sales | Shares Issued | |||||||||||||||||
2021 (a) | $ | $ | ||||||||||||||||||
| 2024 | ||||||||||||||||||||
(a)ATM Program has been terminated and no future issuance will occur.
During 2024, the Company entered into forward sale agreements to sell an aggregate of 2,187,700 shares of common stock under the 2024 ATM Program at a weighted-average share price of $18.29 , subject to certain adjustments. The Company expects to settle the outstanding shares of common stock in the fourth quarter of 2025 for expected net proceeds of approximately $37.3 million. As of September 30, 2025, the Company has not settled any of the outstanding shares of these forward sales agreements. There was no ATM Program activity during the nine months ended September 30, 2024. After considering the shares sold subject to forward sale agreements, the Company has $360.0 million of capacity remaining under the ATM Program as of September 30, 2025.
Stock Repurchase Program
The Company has a stock repurchase program (the “Repurchase Program”), which authorizes the Company to repurchase up to $150.0 million of the Company’s common stock. On March 11, 2025, the Company’s Board of Directors re-authorized the Repurchase Program for a 12-month period ending on March 14, 2026. The Repurchase Program may be extended, suspended, or discontinued at any time. Under the Repurchase Program, repurchases of the Company’s stock can be made in the open market or through private transactions from time to time over the 12-month period, depending on prevailing market conditions and compliance with applicable legal and regulatory requirements. The timing, manner, price, and amount of any repurchases of common stock under the Repurchase Program will be determined at the Company’s discretion, using available cash resources. During the nine months ended September 30, 2025 and 2024, no
22
13. Stock-Based Compensation
Restricted Stock Awards
During the three and nine months ended September 30, 2025, the Company awarded 1,180 and 317,156 shares of restricted stock awards (“RSAs”), respectively, to officers, employees, and non-employee directors under the Company’s equity incentive plan. During the three and nine months ended September 30, 2024, the Company awarded 564 and 833,571 shares of RSAs, respectively, to officers, employees, and non-employee directors under the Company’s equity incentive plan. The holder of RSAs is generally entitled at all times on and after the date of issuance of the restricted common shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. The Company’s outstanding RSAs vest over a -, -, -, or five-year period from the date of the grant and are subject to the holder’s continued service through the applicable vesting dates and in accordance with the terms of the individual award agreements. The weighted average value of awards granted per share during the three and nine months ended September 30, 2025, were $16.24 and $16.75 , respectively, which were based on the market price per share of the Company’s common stock on the grant dates. The weighted average value of awards granted per share during the three and nine months ended September 30, 2024, were $17.41 and $14.77 , respectively.
The following table presents information about the Company’s RSAs:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Compensation cost | $ | $ | $ | $ | |||||||||||||||||||
| Dividends declared on unvested RSAs | |||||||||||||||||||||||
| Fair value of shares vested during the period | |||||||||||||||||||||||
As of September 30, 2025, there was $12.1 million of unrecognized compensation costs related to the unvested restricted shares, which is expected to be recognized over a weighted average period of 2.9 years.
The following table presents information about the Company’s restricted stock activity:
| For the Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except per share amounts) | Number of Shares | Weighted Average Grant Date Fair Value per Share | Number of Shares | Weighted Average Grant Date Fair Value per Share | |||||||||||||||||||
| Unvested at beginning of period | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Vested | |||||||||||||||||||||||
| Forfeited | ( | ( | |||||||||||||||||||||
| Unvested at end of period | |||||||||||||||||||||||
| For the Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except per share amounts) | Number of Shares | Weighted Average Grant Date Fair Value per Share | Number of Shares | Weighted Average Grant Date Fair Value per Share | |||||||||||||||||||
| Unvested at beginning of period | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Vested | ( | ( | |||||||||||||||||||||
| Forfeited | ( | ( | |||||||||||||||||||||
| Unvested at end of period | |||||||||||||||||||||||
23
Performance-based Restricted Stock Units
During the nine months ended September 30, 2025 and 2024, the Company issued target grants of 246,967 and 202,308 of performance-based restricted stock units (“PRSUs”), respectively, under the Company’s equity incentive plan to the officers of the Company. During the three months ended September 30, 2025 and 2024, there were no 50 % based on the relative total shareholder return (“rTSR”) of the Company’s common stock as compared to the rTSR of peer companies, as identified in the grant agreements, over a three-year period, and 50 % based on the rTSR of the Company’s common stock as compared to the rTSR of the MSCI US REIT Index over a year measurement period. Vesting percentages range from 0 % to 200 % with a target of 100 %. rTSR means the percentage appreciation in the fair market value of one share over the three-year measurement period beginning on the date of grant, assuming the reinvestment of dividends on the ex-dividend date. The target number of units is based on achieving a rTSR equal to the 55 th percentile of the peer companies and MSCI US REIT Index. For PRSUs issued during the nine months ended September 30, 2025 and 2024 that achieve a percentile rank of at least the 55 25
The following table presents compensation cost recognized on the Company’s performance-based restricted stock units:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Compensation cost | $ | $ | $ | $ | |||||||||||||||||||
As of September 30, 2025, there was $6.2 million of unrecognized compensation costs related to the unvested PRSUs, which is expected to be recognized over a weighted average period of 2.0 years.
The following table presents information about the Company’s performance-based restricted stock unit activity:
| For the Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except per share amounts) | Number of Shares | Weighted Average Grant Date Fair Value per Share | Number of Shares | Weighted Average Grant Date Fair Value per Share | |||||||||||||||||||
| Unvested at beginning of period | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Vested | |||||||||||||||||||||||
| Forfeited | ( | ||||||||||||||||||||||
| Unvested at end of period | |||||||||||||||||||||||
| For the Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except per share amounts) | Number of Shares | Weighted Average Grant Date Fair Value per Share | Number of Shares | Weighted Average Grant Date Fair Value per Share | |||||||||||||||||||
| Unvested at beginning of period | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Vested | ( | ( | |||||||||||||||||||||
| Forfeited | ( | ||||||||||||||||||||||
| Unvested at end of period | |||||||||||||||||||||||
24
14. Earnings per Share
The following table summarizes the components used in the calculation of basic and diluted earnings per share (“EPS”):
| (in thousands, except per share amounts) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Basic earnings: | |||||||||||||||||||||||
Net earnings attributable to Broadstone Net Lease, Inc. common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Less: earnings allocated to unvested restricted shares | ( | ( | ( | ( | |||||||||||||||||||
| Net earnings used to compute basic earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings: | |||||||||||||||||||||||
| Net earnings used to compute basic earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Add: net earnings attributable to OP Unit holders | |||||||||||||||||||||||
| Net earnings used to compute diluted earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average number of common shares outstanding | |||||||||||||||||||||||
Less: weighted average unvested restricted shares (a) | ( | ( | ( | ( | |||||||||||||||||||
| Weighted average number of common shares outstanding used in basic earnings per common share | |||||||||||||||||||||||
Add: effects of restricted stock units (b) | |||||||||||||||||||||||
Add: effects of convertible OP Units (c) | |||||||||||||||||||||||
| Weighted average number of common shares outstanding used in diluted earnings per common share | |||||||||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | |||||||||||||||||||
(a)Represents the weighted average effects of 1,070,775 and 979,140 unvested restricted shares of common stock as of September 30, 2025 and 2024, respectively, which will be excluded from the computation of earnings per share until they vest.
(b)Represents the weighted average effects of shares of common stock to be issued as though the end of the period were the end of the performance period (see Note 13).
(c)Represents the weighted average effects of 8,315,458 and 8,754,702 OP Units outstanding at September 30, 2025 and 2024, respectively.
15. Supplemental Cash Flow Disclosures
The following table summarizes the Company’s supplemental cash flow information:
| For the Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Supplemental disclosures: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Cash paid for income taxes | |||||||||||
| Non-cash activities: | |||||||||||
Issuance and conversion of OP Units to common stock (a) | |||||||||||
| Dividends declared not yet paid | |||||||||||
| Reclassifications from Property under development to Buildings and improvements upon substantial completion of development properties | |||||||||||
| Reclassification of operating lease to sales-type lease | |||||||||||
(a)See Note 10.
25
16. Commitments and Contingencies
Litigation
From time to time, the Company is a party to various litigation matters incidental to the conduct of the Company’s business. While the resolution of such matters cannot be predicted with certainty, based on currently available information, the Company does not believe that the final outcome of any of these matters will have a material effect on its consolidated financial position, results of operations, or liquidity.
Property and Acquisition Related
In connection with ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company is not aware of any non-compliance, liability, claim, or other environmental condition that would have a material effect on its consolidated financial position, results of operations, or liquidity.
As of September 30, 2025, the Company has commitments to fund eight build-to-suit transactions with remaining obligations of $235.8 million expected to fund in multiple draws through October 2026, using a combination of available cash on hand and revolving credit facility borrowings. Rent is contractually scheduled to commence when the properties reach substantial completion and are made available for use by the tenant, which is expected to occur at various dates between October 2025 and October 2026.
The Company is a party to two separate tax protection agreements with the contributing members of two distinct UPREIT transactions and a third tax protection agreement entered into in connection with the Company’s internalization. The tax protection agreements require the Company to indemnify the beneficiaries in the event of a sale, exchange, transfer, or other disposal of the contributed property, and in the case of the tax protection agreement entered into in connection with the Company’s internalization, the entire Company, in a taxable transaction that would cause such beneficiaries to recognize a gain that is protected under the agreements, subject to certain exceptions. The Company is required to allocate an amount of nonrecourse liabilities to each beneficiary that is at least equal to the minimum liability amount, as contained in the agreements. The minimum liability amount and the associated allocation of nonrecourse liabilities are calculated in accordance with applicable tax regulations, are completed at the OP level, and are not probable. Therefore, there is no impact to the Condensed Consolidated Financial Statements. Based on values as of September 30, 2025, taxable sales of the applicable properties would trigger liability under the agreements of approximately $20.4 million. Based on information available, the Company does not believe that the events resulting in damages as detailed above have occurred or are likely to occur in the foreseeable future.
In the normal course of business, the Company enters into various types of commitments to purchase real estate properties. These commitments are generally subject to the Company’s customary due diligence process and, accordingly, a number of specific conditions must be met before the Company is obligated to purchase the properties.
Obligations Under Operating and Finance Leases
As described in Note 2, the Company is a lessee under non-cancelable operating and finance leases associated with its corporate headquarters and other office spaces as well as ground leases. The Company’s obligations under leases primarily consist of a lease for the Company’s corporate office space, which expires in October 2033 and was determined to be an operating lease. The lease contains two five-year extension options, exercisable at the Company’s discretion, that are not reasonably certain to be exercised, and are therefore excluded from our calculation of the lease liability. The remaining lease obligations primarily consist of ground leases that, in accordance with the terms of our leases, are typically required to be reimbursed by our tenants. The Company remains primarily responsible for ground leases in the event a tenant is unable to pay. The weighted average discount rate on our operating and finance leases is 8.4 27.2
26
The following table summarizes the total lease costs associated with operating and finance leases:
| (in thousands) | Financial Statement Presentation | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Operating lease costs: | ||||||||||||||||||||||||||
| Office leases | General and administrative | $ | $ | $ | $ | |||||||||||||||||||||
| Ground leases | Property and operating expense | |||||||||||||||||||||||||
| Ground leases - development properties | Property under development | |||||||||||||||||||||||||
| Variable lease costs - ground leases | Property and operating expense | |||||||||||||||||||||||||
| Financing lease costs: | ||||||||||||||||||||||||||
| Amortization of right-of-use assets | Depreciation and amortization | |||||||||||||||||||||||||
| Interest expense on lease liabilities | Interest expense | |||||||||||||||||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||||||||||||
The following table summarizes payments associated with obligations under operating and finance leases reported as Net cash provided by operating activities on the accompanying Condensed Consolidated Statements of Cash Flows:
| For the Nine Months Ended September 30, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | |||||||||||||||||||||
| Operating lease payments | $ | $ | |||||||||||||||||||||
| Financing lease payments | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
At September 30, 2025, minimum future rental payments due from the Company for operating and finance leases over the next five years and thereafter are as follows:
| (in thousands) | Operating Leases | Financing Leases | |||||||||
| Remainder of 2025 | $ | $ | |||||||||
| 2026 | |||||||||||
| 2027 | |||||||||||
| 2028 | |||||||||||
| 2029 | |||||||||||
| Thereafter | |||||||||||
| Total undiscounted lease payments | |||||||||||
| Present value adjustment for remaining lease payments | ( | ( | |||||||||
| Total lease liability | $ | $ | |||||||||
17. Subsequent Events
On October 15, 2025, the Company paid distributions totaling $57.3 million.
On October 23, 2025, the Board of Directors declared a quarterly distribution of $0.29 per share on the Company’s common stock and OP Units for the fourth quarter of 2025, which will be payable on or before January 15, 2026 to stockholders and OP Unit holders of record as of December 31, 2025.
Subsequent to September 30, 2025, the Company borrowed $103.0 million, and paid down $24.0 million on the unsecured revolving credit facility, the proceeds of which were used to fund investment activity and for general corporate purposes.
27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Except where the context suggests otherwise, as used in this Quarterly Report on Form 10-Q, the terms “BNL,” “we,”“us,”“our,” and “our Company” refer to Broadstone Net Lease, Inc., a Maryland corporation incorporated on October 18, 2007, and, as required by context, Broadstone Net Lease, LLC, a New York limited liability company, which we refer to as the or our “OP,” and to their respective subsidiaries.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes to the Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views regarding our business, financial performance, growth prospects and strategies, market opportunities, and market trends, that are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words. All of the forward-looking statements included in this Quarterly Report on Form 10-Q are subject to various risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results, performance, and achievements could differ materially from those expressed in or by the forward-looking statements and may be affected by a variety of risks and other factors. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from such forward-looking statements.
Important factors that could cause results to differ materially from the forward-looking statements are described in Item 1. “Business,” Item 1A. “Risk Factors,” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K, as filed with the SEC on February 20, 2025, and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, which was filed with the SEC on May 1, 2025. The “Risk Factors” of our 2024 Annual Report should not be construed as exhaustive and should be read in conjunction with other cautionary statements included elsewhere in this Quarterly Report on Form 10-Q.
You are cautioned not to place undue reliance on any forward-looking statements included in this Quarterly Report on Form 10-Q. All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and the risk that actual results, performance, and achievements will differ materially from the expectations expressed in or referenced by this Quarterly Report on Form 10-Q will increase with the passage of time. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.
Regulation FD Disclosures
We use any of the following to comply with our disclosure obligations under Regulation FD: U.S. Securities and Exchange Commission (“SEC”) filings, press releases, public conference calls, or our website. We routinely post important information on our website at www.broadstone.com, including information that may be deemed material. We encourage our shareholders and others interested in our company to monitor these distribution channels for material disclosures. Our website address is included in this Quarterly Report as a textual reference only and the information on the website is not incorporated by reference in this Quarterly Report.
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Explanatory Note and Certain Defined Terms
Unless the context otherwise requires, the following terms and phrases are used throughout this MD&A as described below:
•“annualized base rent” or “ABR” means the annualized contractual cash rent due for the last month of the reporting period, excluding the impacts of short-term rent deferrals, abatements, or free rent, and adjusted to remove rent from properties sold during the month and to include a full month of contractual cash rent for investments made during the month;
•“investments” or amounts “invested” include real estate investments in new property acquisitions, revenue generating capital expenditures, whereby we agree to fund certain expenditures in exchange for increased rents that often include rent escalations and terms consistent with that of the underlying lease, build-to-suit developments, and transitional capital, which represent shorter term investments and currently includes preferred equity investments, and exclude capitalized costs;
•“cash capitalization rate” represents either (1) for acquisitions and new build-to-suit developments, our pro-rata share of the estimated first year cash yield to be generated on a real estate investment, which was estimated at the time of investment based on the contractually specified cash base rent for the first full year after the date of the investment, divided by the purchase price for the property excluding capitalized acquisition costs, or (2) for dispositions, the property’s ABR in effect immediately prior to the disposition, divided by the disposition price, or (3) for transitional capital, the contractual cash yield to be generated on total invested capital;
•“CPI” means the Consumer Price Index for All Urban Consumers (CPI-U): U.S. City Average, All Items, as published by the U.S. Bureau of Labor Statistics, or other similar index which is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services;
•“occupancy” or a specified percentage of our portfolio that is “occupied” or “leased” means as of a specified date the quotient of (1) the total rentable square footage of our properties minus the square footage of our properties that are vacant and from which we are not receiving any rental payment, and (2) the total square footage of our properties;
•“Revolving Credit Facility” means our $1.0 billion unsecured revolving credit facility, dated February 28, 2025, with J.P. Morgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto; and
•“straight-line yield” represents our pro-rata share of the estimated first year yield to be generated on a real estate investment, which was computed at the time of investment based on the straight-line annual rental income computed in accordance with GAAP, divided by the purchase price.
Overview
We are an industrial-focused, diversified net lease real estate investment trust (“REIT”) that invests in primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. As of September 30, 2025, our portfolio includes 759 properties, with 752 properties located in 44 U.S. states and seven properties located in four Canadian provinces.
We expect to achieve growth in revenues and earnings through our four core building blocks, which are (1) embedded same store net operating income growth through best-in-class portfolio rent escalations, stable rent collections, minimal credit losses, strong lease rollover outcomes, and accretive recycling, (2) revenue generating capital expenditures with existing tenants, (3) build-to-suit developments, and (4) a diversified acquisition pipeline.
We focus on investing in real estate that is operated by creditworthy single tenants in industries characterized by positive business drivers and trends. We target properties that are an integral part of the tenants’ businesses and are therefore opportunities to secure long-term net leases through which our tenants are able to retain operational control of their strategically important locations, while allocating their debt and equity capital to fund core business operations rather than real estate ownership.
29
-Diversified Investment Strategy. We invest in real estate through property acquisitions, revenue generating capital expenditures, build-to-suit developments, and transitional capital. Our investments in these alternatives fluctuate from time to time depending on macroeconomic conditions and business or market trends. Our strong relationships with brokers, developers, and tenants provides access to off-market and marketed investment opportunities. Off-market transactions are characterized by a lack of a formal marketing process and a lack of widely disseminated marketing materials. Marketed transactions are often characterized by extensive buyer competition. For all investments, we seek to maintain our portfolio’s diversification by property type, geography, tenant, and industry in an effort to reduce fluctuations in income caused by under-performing individual real estate assets or adverse economic conditions affecting an entire industry or geographic region.
-Diversified Portfolio. As of September 30, 2025, our portfolio comprised approximately 40.7 million rentable square feet of operational space, was highly diversified based on property type, geography, tenant, and industry, and was cross-diversified within each (e.g., property-type diversification within a geographic concentration):
•Property Type: We are primarily diversified across industrial and retail property types. Within these sectors, we have meaningful concentrations in distribution and warehouse, manufacturing, food processing, general merchandise, quick service restaurants, and casual dining.
•Geographic Diversification: Our properties are located in 44 U.S. states and four Canadian provinces, with no single geographic concentration exceeding 9.2% of our ABR.
•Tenant and Industry Diversification: Our properties are occupied by 204 different commercial tenants who operate 195 distinct brands that are diversified across 56 varying industries, with no single tenant accounting for more than 3.9% of our ABR.
-Strong In-Place Leases with Significant Remaining Lease Term. As of September 30, 2025, our portfolio was approximately 99.5% leased with an ABR weighted average remaining lease term of approximately 9.5 years, excluding renewal options.
-Standard Contractual Base Rent Escalation. Approximately 97.5% of our leases have contractual rent escalations, with an ABR weighted average increase of 2.0%.
-Extensive Tenant Financial Reporting. Approximately 96.6% of our tenants, based on ABR, provide financial reporting, of which 82.0% are required to provide us with specified financial information on a periodic basis, and an additional 14.6% of our tenants report financial statements publicly, either through SEC filings or otherwise.
Current Macroeconomic Conditions and Strategic Priorities
Throughout 2023 and 2024, challenging macroeconomic conditions directly impacted the broader commercial real estate market and, in particular, the net lease real estate market. During that period, interest rates rose steadily, resulting in a challenging lending environment and a material increase in the cost of capital for commercial real estate buyers and lenders. The increase in interest rates accelerated at a more aggressive pace than commercial real estate capitalization rates, thereby compressing earnings on new investments. Market expectations about expansionary monetary policy resulted in net lease real estate sellers maintaining higher pricing expectations, which ultimately led to a significant decrease in transaction volumes. These challenging macroeconomic conditions have limited, and may continue to limit, the ability of commercial real estate owners, including us, to complete real estate acquisitions at volume and accretion levels consistent with years prior to this environment, resulting in lower earnings growth rates compared to historical periods. Notwithstanding the challenging macroeconomic conditions, we believe that our portfolio performance and strong liquidity profile position our Company well for future opportunities. We expect to achieve growth in revenues and earnings through our four building blocks, including embedded same store net operating income growth, revenue generating capital expenditures with existing tenants, build-to-suit developments, and a diversified acquisition pipeline.
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Diversified Investment Activity
During the three months ended September 30, 2025, our investment activity consisted of the following:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 30, 2025 | June 30, 2025 | March 31, 2025 | September 30, 2025 | ||||||||||||||||||||
| Acquisitions: | |||||||||||||||||||||||
| Acquisition price | $ | 139,462 | $ | 54,722 | $ | 59,004 | $ | 253,188 | |||||||||||||||
| Initial cash capitalization rate | 7.1 | % | 7.1 | % | 7.2 | % | 7.1 | % | |||||||||||||||
| Straight-line yield | 8.1 | % | 8.2 | % | 8.3 | % | 8.2 | % | |||||||||||||||
| Weighted average lease term (years) | 12.0 | 10.7 | 13.6 | 12.1 | |||||||||||||||||||
| Weighted average annual rent increase | 2.4 | % | 3.0 | % | 2.6 | % | 2.6 | % | |||||||||||||||
| Build-to-suit developments: | |||||||||||||||||||||||
| Investments | $ | 40,999 | $ | 63,295 | $ | 26,494 | $ | 130,788 | |||||||||||||||
| Revenue generating capital expenditures: | |||||||||||||||||||||||
| Investments | $ | 5,507 | $ | — | $ | 2,835 | $ | 8,342 | |||||||||||||||
| Initial cash capitalization rate | 8.5 | % | — | % | 8.0 | % | 8.3 | % | |||||||||||||||
| Weighted average lease term (years) | 16.7 | — | 17.7 | 17.0 | |||||||||||||||||||
| Weighted average annual rent increase | 2.0 | % | — | % | 1.7 | % | 1.9 | % | |||||||||||||||
Transitional Capital: | |||||||||||||||||||||||
| Investments | $ | 17,920 | $ | 22,781 | $ | — | $ | 40,701 | |||||||||||||||
Cash capitalization rate | 7.8 | % | 7.8 | % | — | % | 7.8 | % | |||||||||||||||
| Total investments | $ | 203,894 | $ | 140,798 | $ | 88,333 | $ | 433,025 | |||||||||||||||
Total initial cash capitalization rate (a) | 7.1 | % | 7.1 | % | 7.2 | % | 7.1 | % | |||||||||||||||
Total weighted average lease term (years) (a) | 12.2 | 10.7 | 13.8 | 12.3 | |||||||||||||||||||
Total weighted average annual rent increase (a) | 2.4 | % | 3.0 | % | 2.5 | % | 2.5 | % | |||||||||||||||
(a)Transitional capital, which represents a contractual yield on invested capital, and build-to-suit developments, which do not generate revenue during construction, are excluded from the calculations of total cash capitalization, weighted average lease terms, and weighted average rent increases.
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Build-to-Suit Development Projects
The following table summarizes the Company’s in-process and stabilized developments as of September 30, 2025:
| Property | Projected Rentable Square Feet | Start Date (b) | Target Stabilization Date/Stabilized Date (c) | Lease Term (Years) | Annual Rent Escalations | Estimated Total Project Investment (d) | Cumulative Investment | Estimated Remaining Investment | Estimated Cash Capitalization Rate (e) | Estimated Straight-line Yield | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| In-process retail: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 Brew (Jacksonville - FL) | 1 | Jun. 2025 | Oct. 2025 | 15.0 | 1.9 | % | $ | 2,008 | $ | 1,411 | $ | 597 | 8.0 | % | 8.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Sprouts (Bedford, TX) | 22 | Jul. 2025 | Aug. 2026 | 15.0 | 0.9 | % | $ | 9,533 | $ | — | $ | 9,533 | 7.2 | % | 7.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| In-process industrial: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sierra Nevada (Dayton - OH) | 122 | Oct. 2024 | Nov. 2025 | 15.0 | 3.0 | % | 58,563 | 44,584 | 13,979 | 7.5 | % | 9.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sierra Nevada (Dayton - OH) | 122 | Oct. 2024 | Mar. 2026 | 15.0 | 3.0 | % | 55,525 | 27,652 | 27,873 | 7.7 | % | 9.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Southwire (Bremen - GA) | 1,178 | Dec. 2024 | Oct. 2026 | 10.0 | 2.8 | % | 115,411 | 22,200 | 93,211 | 7.8 | % | 8.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Fiat Chrysler Automobile (Forsyth - GA) | 422 | Apr. 2025 | Aug. 2026 | 15.0 | 2.8 | % | 78,242 | 19,635 | 58,607 | 6.9 | % | 8.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| AGCO (Vasaila - CA) | 115 | Jun. 2025 | Aug. 2026 | 12.0 | 3.5 | % | 19,523 | 14,314 | 5,209 | 7.0 | % | 8.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Palmer Logistics (Midlothian, TX) (f) | 270 | Jul. 2025 | Jul. 2026 | 12.3 | 3.5 | % | 32,063 | 5,260 | 26,803 | 7.6 | % | 9.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total / weighted average | 2,252 | 13.1 | 2.9 | % | 370,868 | 135,056 | 235,812 | 7.5 | % | 8.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stabilized industrial: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| UNFI (Sarasota - FL) | 1,016 | May 2023 | Stabilized - Sep. 2024 | 15.0 | 2.5 | % | 200,958 | 200,958 | — | 7.2 | % | 8.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stabilized retail: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 Brew (High Point - NC) | 1 | Dec. 2024 | Stabilized - Jun. 2025 | 15.0 | 1.9 | % | 1,975 | 1,975 | — | 8.0 | % | 8.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| 7 Brew (Charleston - SC) | 1 | Feb. 2025 | Stabilized - May 2025 | 15.0 | 1.9 | % | 1,729 | 1,729 | — | 7.9 | % | 8.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total / weighted average | 3,270 | 13.7 | 2.7 | % | $ | 575,530 | $ | 339,718 | $ | 235,812 | 7.4 | % | 8.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(b)The period in which we have acquired access to the land and begun physical construction on a property.
(c)Represents our current estimate of the period in which we will have substantially completed a project and the project is made available for occupancy. We expect to update our timing estimates on a quarterly basis.
(d)Represents the estimated costs to be incurred to complete development of each project. We expect to update our estimates upon completion of the project, or sooner if there are any significant changes to expected costs from quarter to quarter. Excludes capitalized costs consisting of capitalized interest and other acquisition costs.
(e)Calculated by dividing the estimated first year cash yield to be generated on a real estate investment by the Estimated Total Project Investment for the property.
(f)Development represents our common and preferred equity investments in a consolidated joint venture, and exclude amounts attributed to non-controlling interest holders.
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Our Real Estate Investment Portfolio
The following charts summarize our portfolio diversification by property type, tenant, brand, industry, and geographic location as of September 30, 2025. These portfolio statistics exclude transitional capital investments. The percentages below are calculated based on our ABR of $412.9 million as of September 30, 2025.
Diversification by Property Type
| Property Type | # of Properties | ABR (’000s) | ABR as a % of Total Portfolio | Square Feet (’000s) | SF as a % of Total Portfolio | |||||||||||||||||||||||||||
| Industrial | ||||||||||||||||||||||||||||||||
| Distribution & Warehouse | 53 | $ | 85,810 | 20.8 | % | 12,057 | 29.7 | % | ||||||||||||||||||||||||
| Manufacturing | 79 | 71,030 | 17.2 | % | 12,270 | 30.2 | % | |||||||||||||||||||||||||
| Food Processing | 34 | 50,722 | 12.3 | % | 5,736 | 14.1 | % | |||||||||||||||||||||||||
| Flex and R&D | 10 | 22,059 | 5.3 | % | 1,589 | 3.9 | % | |||||||||||||||||||||||||
| Industrial Services | 21 | 13,000 | 3.1 | % | 528 | 1.3 | % | |||||||||||||||||||||||||
| Cold Storage | 3 | 10,266 | 2.5 | % | 723 | 1.8 | % | |||||||||||||||||||||||||
| In-process Developments | 6 | — | — | — | — | % | ||||||||||||||||||||||||||
| Untenanted | 1 | — | — | 178 | 0.4 | % | ||||||||||||||||||||||||||
| Industrial Total | 207 | 252,887 | 61.2 | % | 33,081 | 81.4 | % | |||||||||||||||||||||||||
| Retail | ||||||||||||||||||||||||||||||||
| General Merchandise | 145 | 32,572 | 7.8 | % | 2,452 | 6.0 | % | |||||||||||||||||||||||||
| Quick Service Restaurants | 153 | 27,498 | 6.7 | % | 515 | 1.3 | % | |||||||||||||||||||||||||
| Casual Dining | 95 | 26,731 | 6.5 | % | 637 | 1.6 | % | |||||||||||||||||||||||||
| Automotive | 64 | 11,571 | 2.8 | % | 760 | 1.9 | % | |||||||||||||||||||||||||
| Animal Services | 27 | 11,492 | 2.8 | % | 421 | 1.0 | % | |||||||||||||||||||||||||
| Home Furnishings | 13 | 7,476 | 1.8 | % | 797 | 2.0 | % | |||||||||||||||||||||||||
| Healthcare Services | 18 | 6,071 | 1.5 | % | 220 | 0.5 | % | |||||||||||||||||||||||||
| Education | 4 | 2,952 | 0.7 | % | 118 | 0.3 | % | |||||||||||||||||||||||||
| In-process Developments | 2 | — | — | — | — | |||||||||||||||||||||||||||
| Untenanted | 2 | — | — | % | 14 | — | % | |||||||||||||||||||||||||
| Retail Total | 523 | 126,363 | 30.6 | % | 5,934 | 14.6 | % | |||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Office | 14 | 23,967 | 5.8 | % | 1,311 | 3.2 | % | |||||||||||||||||||||||||
| Clinical & Surgical | 15 | 9,727 | 2.4 | % | 327 | 0.8 | % | |||||||||||||||||||||||||
| Other Total | 29 | 33,694 | 8.2 | % | 1,638 | 4.0 | % | |||||||||||||||||||||||||
| Total | 759 | $ | 412,944 | 100.0 | % | 40,653 | 100.0 | % | ||||||||||||||||||||||||
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Diversification by Tenant
| Tenant | Property Type | # of Properties | ABR (’000s) | ABR as a % of Total Portfolio | Square Feet (’000s) | SF as a % of Total Portfolio | ||||||||||||||||||||||||||||||||
| Roskam Baking Company, LLC* | Food Processing | 7 | $ | 16,236 | 3.9 | % | 2,250 | 5.5 | % | |||||||||||||||||||||||||||||
| United Natural Foods, Inc. | Distribution & Warehouse | 1 | 14,386 | 3.5 | % | 1,016 | 2.6 | % | ||||||||||||||||||||||||||||||
| AHF, LLC* | Distribution & Warehouse/Manufacturing | 8 | 9,852 | 2.4 | % | 2,284 | 5.6 | % | ||||||||||||||||||||||||||||||
| Joseph T. Ryerson & Son, Inc | Distribution & Warehouse | 11 | 8,116 | 2.0 | % | 1,599 | 4.0 | % | ||||||||||||||||||||||||||||||
| Jack’s Family Restaurants LP* | Quick Service Restaurants | 43 | 7,605 | 1.8 | % | 147 | 0.4 | % | ||||||||||||||||||||||||||||||
| Dollar General Corporation | General Merchandise | 64 | 6,606 | 1.6 | % | 609 | 1.5 | % | ||||||||||||||||||||||||||||||
| Tractor Supply Company | General Merchandise | 23 | 6,525 | 1.6 | % | 462 | 1.1 | % | ||||||||||||||||||||||||||||||
J. Alexander's, LLC* | Hotels, Restaurants & Leisure | 16 | 6,301 | 1.5 | % | 132 | 0.3 | % | ||||||||||||||||||||||||||||||
| Salm Partners, LLC* | Food Processing | 2 | 6,276 | 1.5 | % | 426 | 1.0 | % | ||||||||||||||||||||||||||||||
| Nestle’ Dreyer's Ice Cream Company | Cold Storage | 2 | 6,259 | 1.5 | % | 503 | 1.2 | % | ||||||||||||||||||||||||||||||
| Total Top 10 Tenants | 177 | 88,162 | 21.3 | % | 9,428 | 23.2 | % | |||||||||||||||||||||||||||||||
| Hensley & Company* | Distribution & Warehouse | 3 | 6,231 | 1.5 | % | 577 | 1.4 | % | ||||||||||||||||||||||||||||||
| BluePearl Holdings, LLC** | Animal Services | 13 | 5,905 | 1.4 | % | 159 | 0.4 | % | ||||||||||||||||||||||||||||||
| Axcelis Technologies, Inc. | Flex and R&D | 1 | 5,900 | 1.4 | % | 417 | 1.0 | % | ||||||||||||||||||||||||||||||
| Owens & Minor | Distribution & Warehouse | 2 | 5,785 | 1.4 | % | 523 | 1.3 | % | ||||||||||||||||||||||||||||||
| Red Lobster Hospitality & Red Lobster Restaurants LLC* | Casual Dining | 18 | 5,674 | 1.4 | % | 147 | 0.4 | % | ||||||||||||||||||||||||||||||
| Outback Steakhouse of Florida LLC*(a) | Casual Dining | 22 | 5,544 | 1.3 | % | 140 | 0.3 | % | ||||||||||||||||||||||||||||||
| Krispy Kreme Doughnut Corporation | Quick Service Restaurants/ Food Processing | 27 | 5,538 | 1.3 | % | 156 | 0.4 | % | ||||||||||||||||||||||||||||||
| Big Tex Trailer Manufacturing Inc.* | Automotive/Distribution & Warehouse/Manufacturing/Office | 17 | 5,259 | 1.3 | % | 1,302 | 3.2 | % | ||||||||||||||||||||||||||||||
| Jelly Belly Candy Company | Distribution & Warehouse/Food Processing/General Merchandise | 5 | 4,790 | 1.2 | % | 575 | 1.4 | % | ||||||||||||||||||||||||||||||
| Carvana, LLC | Industrial Services | 2 | 4,755 | 1.2 | % | 230 | 0.6 | % | ||||||||||||||||||||||||||||||
| Total Top 20 Tenants | 287 | $ | 143,543 | 34.7 | % | 13,654 | 33.6 | % | ||||||||||||||||||||||||||||||
(a)Tenant’s properties include 20 Outback Steakhouse restaurants and two Carrabba’s Italian Grill restaurants.
*Subject to a master lease.
**Includes properties leased by multiple tenants, some, not all, of which are subject to master leases.
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Diversification by Industry
| Tenant Industry | # of Properties | ABR (’000s) | ABR as a % of Total Portfolio | Square Feet (’000s) | SF as a % of Total Portfolio | |||||||||||||||||||||||||||
| Restaurants | 252 | $ | 55,071 | 13.3 | % | 1,195 | 2.9 | % | ||||||||||||||||||||||||
| Packaged Foods & Meats | 36 | 51,452 | 12.5 | % | 5,873 | 14.4 | % | |||||||||||||||||||||||||
| Food Distributors | 7 | 28,049 | 6.8 | % | 2,534 | 6.2 | % | |||||||||||||||||||||||||
| Distributors | 28 | 21,936 | 5.3 | % | 3,357 | 8.3 | % | |||||||||||||||||||||||||
| Healthcare Facilities | 42 | 21,220 | 5.1 | % | 748 | 1.8 | % | |||||||||||||||||||||||||
| Specialty Stores | 39 | 21,207 | 5.1 | % | 1,845 | 4.5 | % | |||||||||||||||||||||||||
| Auto Parts & Equipment | 38 | 19,003 | 4.6 | % | 2,971 | 7.3 | % | |||||||||||||||||||||||||
| Home Furnishing Retail | 17 | 12,370 | 3.0 | % | 1,692 | 4.2 | % | |||||||||||||||||||||||||
| Healthcare Services | 18 | 12,175 | 2.9 | % | 663 | 1.6 | % | |||||||||||||||||||||||||
| Specialized Consumer Services | 45 | 11,698 | 2.8 | % | 712 | 1.8 | % | |||||||||||||||||||||||||
| Metal & Glass Containers | 8 | 10,933 | 2.6 | % | 2,206 | 5.4 | % | |||||||||||||||||||||||||
| General Merchandise Stores | 100 | 10,437 | 2.5 | % | 928 | 2.3 | % | |||||||||||||||||||||||||
| Industrial Machinery | 19 | 9,932 | 2.4 | % | 1,901 | 4.7 | % | |||||||||||||||||||||||||
| Forest Products | 8 | 9,852 | 2.4 | % | 2,284 | 5.6 | % | |||||||||||||||||||||||||
| Electronic Components | 2 | 6,765 | 1.6 | % | 466 | 1.1 | % | |||||||||||||||||||||||||
| Other (41 industries) | 97 | 110,844 | 27.1 | % | 11,086 | 27.4 | % | |||||||||||||||||||||||||
| Untenanted properties | 3 | — | — | 192 | 0.5 | % | ||||||||||||||||||||||||||
| Total | 759 | $ | 412,944 | 100.0 | % | 40,653 | 100.0 | % | ||||||||||||||||||||||||
35
Diversification by Geographic Location
| State / Province | # of Properties | ABR (’000s) | ABR as a % of Total Portfolio | Square Feet (’000s) | SF as a % of Total Portfolio | State / Province | # of Properties | ABR (’000s) | ABR as a % of Total Portfolio | Square Feet (’000s) | SF as a % of Total Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TX | 66 | $ | 37,820 | 9.2 | % | 3,562 | 8.8 | % | SD | 2 | $4,524 | 1.1% | 340 | 0.8% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MI | 51 | 36,592 | 8.9 | % | 4,009 | 9.9 | % | MS | 12 | 4,160 | 1.0% | 607 | 1.5% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FL | 29 | 26,212 | 6.3 | % | 1,643 | 4.0 | % | LA | 5 | 3,833 | 0.9% | 211 | 0.5% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| IL | 29 | 23,097 | 5.6 | % | 2,364 | 5.8 | % | NE | 6 | 3,438 | 0.8% | 492 | 1.2% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CA | 16 | 22,586 | 5.5 | % | 2,215 | 5.5 | % | SC | 13 | 3,379 | 0.8% | 304 | 0.7% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MN | 21 | 20,164 | 4.9 | % | 3,051 | 7.5 | % | WA | 14 | 3,349 | 0.8% | 148 | 0.4% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WI | 23 | 18,744 | 4.5 | % | 1,909 | 4.7 | % | IA | 4 | 2,922 | 0.7% | 622 | 1.5% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OH | 49 | 16,891 | 4.1 | % | 1,584 | 3.9 | % | NM | 9 | 2,795 | 0.7% | 107 | 0.3% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TN | 48 | 15,383 | 3.7 | % | 1,083 | 2.7 | % | UT | 3 | 2,768 | 0.7% | 280 | 0.7% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| IN | 27 | 14,343 | 3.5 | % | 1,687 | 4.1 | % | CO | 4 | 2,612 | 0.6% | 126 | 0.3% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PA | 23 | 13,029 | 3.2 | % | 2,169 | 5.3 | % | MD | 3 | 2,155 | 0.5% | 205 | 0.5% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AL | 53 | 12,981 | 3.1 | % | 949 | 2.3 | % | CT | 2 | 1,938 | 0.5% | 55 | 0.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GA | 35 | 12,173 | 2.9 | % | 1,576 | 3.9 | % | MT | 7 | 1,728 | 0.4% | 43 | 0.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NC | 26 | 9,963 | 2.4 | % | 961 | 2.4 | % | DE | 4 | 1,175 | 0.3% | 133 | 0.3% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KY | 23 | 9,296 | 2.3 | % | 927 | 2.3 | % | ND | 2 | 1,073 | 0.3% | 24 | 0.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MO | 19 | 9,076 | 2.2 | % | 1,260 | 3.1 | % | VT | 2 | 439 | 0.1% | 24 | 0.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WV | 18 | 8,982 | 2.2 | % | 1,232 | 3.0 | % | WY | 1 | 338 | 0.1% | 21 | 0.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AZ | 7 | 8,956 | 2.2 | % | 747 | 1.8 | % | NV | 1 | 277 | 0.1% | 6 | 0.0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OK | 25 | 8,704 | 2.1 | % | 1,006 | 2.5 | % | OR | 1 | 136 | 0.0% | 9 | 0.0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AR | 10 | 7,589 | 1.8 | % | 340 | 0.8 | % | Total U.S. | 752 | $404,890 | 98.0% | 40,224 | 98.9% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NY | 28 | 7,410 | 1.8 | % | 562 | 1.4 | % | BC | 2 | $4,698 | 1.1% | 253 | 0.6% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MA | 3 | 6,332 | 1.5 | % | 444 | 1.1 | % | ON | 3 | 2,049 | 0.6% | 101 | 0.3% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KS | 10 | 5,318 | 1.3 | % | 643 | 1.6 | % | AB | 1 | 963 | 0.2% | 50 | 0.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NJ | 3 | 5,137 | 1.2 | % | 366 | 0.9 | % | MB | 1 | 344 | 0.1% | 25 | 0.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| VA | 15 | 5,073 | 1.2 | % | 178 | 0.4 | % | Total Canada | 7 | $8,054 | 2.0% | 429 | 1.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grand Total | 759 | $412,944 | 100.0% | 40,653 | 100.0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
36
Our Leases
The following chart sets forth our lease expirations based upon the terms of the leases in place as of September 30, 2025.
The following table presents certain information based on lease expirations by year:
| Expiration Year | # of Properties | # of Leases | ABR ('000s) | ABR as a % of Total Portfolio | Square Feet ('000s) | SF as a % of Total Portfolio | ||||||||||||||||||||||||||||||||
| 2025 | 1 | 1 | $ | 1,737 | 0.4 | % | 99 | 0.2 | % | |||||||||||||||||||||||||||||
| 2026 | 23 | 24 | 12,207 | 3.0 | % | 913 | 2.2 | % | ||||||||||||||||||||||||||||||
| 2027 | 28 | 30 | 26,256 | 6.4 | % | 2,257 | 5.6 | % | ||||||||||||||||||||||||||||||
| 2028 | 28 | 28 | 20,043 | 4.9 | % | 1,793 | 4.4 | % | ||||||||||||||||||||||||||||||
| 2029 | 60 | 35 | 18,473 | 4.5 | % | 2,587 | 6.4 | % | ||||||||||||||||||||||||||||||
| 2030 | 99 | 62 | 51,403 | 12.4 | % | 4,806 | 11.8 | % | ||||||||||||||||||||||||||||||
| 2031 | 32 | 27 | 8,496 | 2.1 | % | 854 | 2.1 | % | ||||||||||||||||||||||||||||||
| 2032 | 61 | 46 | 32,877 | 8.0 | % | 3,481 | 8.6 | % | ||||||||||||||||||||||||||||||
| 2033 | 50 | 24 | 19,778 | 4.8 | % | 1,495 | 3.7 | % | ||||||||||||||||||||||||||||||
| 2034 | 38 | 27 | 14,654 | 3.5 | % | 1,245 | 3.1 | % | ||||||||||||||||||||||||||||||
| 2035 | 23 | 18 | 18,103 | 4.4 | % | 2,314 | 5.7 | % | ||||||||||||||||||||||||||||||
| 2036 | 88 | 23 | 31,554 | 7.6 | % | 3,158 | 7.8 | % | ||||||||||||||||||||||||||||||
| 2037 | 22 | 12 | 29,233 | 7.1 | % | 2,777 | 6.8 | % | ||||||||||||||||||||||||||||||
| 2038 | 35 | 34 | 12,819 | 3.1 | % | 1,212 | 3.0 | % | ||||||||||||||||||||||||||||||
| 2039 | 15 | 11 | 22,741 | 5.5 | % | 1,805 | 4.4 | % | ||||||||||||||||||||||||||||||
| 2040 | 32 | 10 | 8,778 | 2.1 | % | 359 | 0.9 | % | ||||||||||||||||||||||||||||||
| 2041 | 39 | 8 | 17,018 | 4.1 | % | 1,367 | 3.4 | % | ||||||||||||||||||||||||||||||
| 2042 | 58 | 13 | 45,099 | 10.9 | % | 4,803 | 11.8 | % | ||||||||||||||||||||||||||||||
| 2043 | 3 | 2 | 8,050 | 1.9 | % | 517 | 1.3 | % | ||||||||||||||||||||||||||||||
| 2044 | 3 | 3 | 1,660 | 0.4 | % | 103 | 0.3 | % | ||||||||||||||||||||||||||||||
| Thereafter | 10 | 3 | 11,965 | 2.9 | % | 2,516 | 6.0 | % | ||||||||||||||||||||||||||||||
| Total leased properties | 748 | 441 | 412,944 | 100.0 | % | 40,461 | 99.5 | % | ||||||||||||||||||||||||||||||
| In-process developments | 8 | 8 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Untenanted properties | 3 | 3 | — | — | 192 | 0.5 | % | |||||||||||||||||||||||||||||||
| Total properties | 759 | 452 | $ | 412,944 | 100.0 | % | 40,653 | 100.0 | % | |||||||||||||||||||||||||||||
37
Substantially all of our leases provide for periodic contractual rent escalations. As of September 30, 2025, leases contributing 97.5% of our ABR provided for increases in future ABR, generally ranging from 1.5% to 3.0% annually, with an ABR weighted average annual increase equal to 2.0% of base rent. Generally, our rent escalators increase rent on specified dates by a fixed percentage. Our escalations provide us with a source of organic revenue growth and a measure of inflation protection. Additional information on lease escalation frequency and weighted average annual escalation rates as of September 30, 2025 is displayed below:
| Lease Escalation Frequency | % of ABR | Weighted Average Annual Increase (a) | ||||||||||||
| Annually | 79.8 | % | 2.2 | % | ||||||||||
| Every 2 years | 0.1 | % | 1.8 | % | ||||||||||
| Every 3 years | 2.2 | % | 2.9 | % | ||||||||||
| Every 4 years | 1.0 | % | 2.4 | % | ||||||||||
| Every 5 years | 8.3 | % | 1.6 | % | ||||||||||
| Every 6 years | 0.1 | % | 1.7 | % | ||||||||||
| Other escalation frequencies | 6.0 | % | 1.5 | % | ||||||||||
Flat (b) | 2.5 | % | — | % | ||||||||||
| Total/ABR Weighted Average | 100.0 | % | 2.0 | % | ||||||||||
(a)Represents the ABR weighted average annual increase of the entire portfolio as if all escalations occurred annually. For leases where rent escalates by the greater of a stated fixed percentage or the change in CPI, we have assumed an escalation equal to the stated fixed percentage in the lease. As of September 30, 2025, leases contributing 4.7% of our ABR provide for rent increases equal to the lesser of a stated fixed percentage or the change in CPI. As any future increase in CPI is unknowable at this time, we have not included an increase in the rent pursuant to these leases in the weighted average annual increase presented.
(b)Generally associated with investment grade retail tenants.
The escalation provisions of our leases (by percentage of ABR) as of September 30, 2025, are displayed in the following chart:
38
Transitional Capital
In addition to investing in new property acquisitions, revenue generating capital expenditures, and build-to-suit developments, we may, from time to time, invest in transitional capital opportunities, including preferred equity interests and real estate lending opportunities. Such investments are intended to be shorter in duration, offering an alternative source of financing.
The following table presents our transitional capital investments at September 30, 2025:
September 30, 2025 | |||||
| Transitional Capital: | |||||
| Retail Center - St. Louis, MO | |||||
| Type | Preferred Equity | ||||
Investment (’000s) (a) | $ | 52,790 | |||
Stabilized cash capitalization rate (b) | 8.0 | % | |||
| Annualized initial cash NOI yield | 7.6 | % | |||
Remaining term (years) (c) | 1.8 | ||||
| Underlying property metrics | |||||
| Number of retail spaces | 28 | ||||
| Rentable square footage (“SF”) (’000s) | 332 | ||||
| Weighted average remaining lease term (years) | 5.8 | ||||
Occupancy rate (based on SF) (d) | 95.2 | % | |||
| Quarterly rent collection | 100.0 | % | |||
| Industrial Park - Olyphant, PA | |||||
| Type | Preferred Equity | ||||
Investment (’000s) (e) | $ | 22,287 | |||
Stabilized cash capitalization rate (b) | 7.8 | % | |||
| Annualized initial cash NOI yield | — | % | |||
Remaining term (years) (f) | 2.8 | ||||
| Industrial Park - Olyphant, PA | |||||
| Type | Preferred Equity | ||||
Investment (’000s) (e) | $ | 17,830 | |||
Stabilized cash capitalization rate (b) | 7.8% | ||||
| Annualized initial cash NOI yield | —% | ||||
Remaining term (years) (f) | 2.8 | ||||
(a)Agreement includes an additional $7.8 million commitment of preferred capital. The remaining commitment at September 30, 2025 is $7.2 million.
(b)Represents stated yield with unpaid amounts accruing with preferential payment.
(c)Agreement contains two one-year extension options subject to a 0.50% extension fee. Repayment at end of term subject to a $3.5 million repayment fee.
(d)Includes leases that have been executed but rent has not yet commenced.
(e)Preferred equity investment in a consolidated joint venture that has acquired entitled land designated for industrial build-to-suit development.
(f)Agreement contains two one-year extension options subject to a 0.25% fee for the first option, and 0.5% for the second option, and the right to transfer or sell our preferred equity at any time.
39
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
| (in thousands) | For the Three Months Ended | ||||||||||||||||||||||
| September 30, 2025 | June 30, 2025 | Increase/(Decrease) | |||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Contractual rental amounts billed for operating leases | $ | 102,270 | $ | 101,014 | $ | 1,256 | 1.2 | % | |||||||||||||||
Adjustment to recognize contractual operating lease billings on a straight-line basis | 5,134 | 5,753 | (619) | (10.8) | % | ||||||||||||||||||
| Net write-offs of accrued rental income | (755) | — | (755) | 100.0 | % | ||||||||||||||||||
| Variable rental amounts earned | 732 | 718 | 14 | 1.9 | % | ||||||||||||||||||
| Earned income from direct financing leases | 675 | 679 | (4) | (0.6) | % | ||||||||||||||||||
| Interest income from sales-type leases | 326 | 14 | 312 | > 100% | |||||||||||||||||||
| Operating expenses billed to tenants | 5,752 | 4,795 | 957 | 20.0 | % | ||||||||||||||||||
| Other income from real estate transactions | 43 | 63 | (20) | (31.7) | % | ||||||||||||||||||
Adjustment to revenue recognized for uncollectible rental amounts billed, net | (10) | (50) | 40 | 80.0 | % | ||||||||||||||||||
| Total lease revenues, net | $ | 114,167 | $ | 112,986 | $ | 1,181 | 1.0 | % | |||||||||||||||
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
| For the Three Months Ended | |||||||||||||||||||||||
| September 30, 2025 | June 30, 2025 | Increase/(Decrease) | |||||||||||||||||||||
| (in thousands) | $ | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Depreciation and amortization | $ | 40,246 | $ | 42,575 | $ | (2,329) | (5.5) | % | |||||||||||||||
| Property and operating expense | 6,198 | 5,003 | 1,195 | 23.9 | % | ||||||||||||||||||
| General and administrative | 9,974 | 9,571 | 403 | 4.2 | % | ||||||||||||||||||
| Provision for impairment of investment in rental properties | 6,999 | 11,939 | (4,940) | (41.4) | % | ||||||||||||||||||
| Total operating expenses | $ | 63,417 | $ | 69,088 | $ | (5,671) | (8.2) | % | |||||||||||||||
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.
40
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:
| For the Three Months Ended | |||||||||||
| (in thousands, except number of properties) | September 30, 2025 | June 30, 2025 | |||||||||
| Number of properties | 7 | 8 | |||||||||
| Carrying value prior to impairment charge | $ | 33,533 | $ | 32,607 | |||||||
| Fair value | 26,534 | 20,668 | |||||||||
| Impairment charge | $ | 6,999 | $ | 11,939 | |||||||
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)
| (in thousands) | For the Three Months Ended | Increase/(Decrease) | |||||||||||||||||||||
| September 30, 2025 | June 30, 2025 | ||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Other income (expenses) | |||||||||||||||||||||||
| Interest income | $ | 182 | $ | 122 | $ | 60 | 49.2 | % | |||||||||||||||
| Interest expense | (28,230) | (21,112) | $ | 7,118 | 33.7 | % | |||||||||||||||||
| Gain on sale of real estate | 3,259 | 566 | $ | 2,693 | >100% | ||||||||||||||||||
| Income taxes | (208) | (199) | $ | 9 | 4.5 | % | |||||||||||||||||
| Other income (expenses) | 1,312 | (3,445) | $ | (4,757) | > 100.0 % | ||||||||||||||||||
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
| For the Three Months Ended | Increase/(Decrease) | ||||||||||||||||||||||
| September 30, 2025 | June 30, 2025 | ||||||||||||||||||||||
| (in thousands, except per share data) | $ | % | |||||||||||||||||||||
| Net income | $ | 27,065 | $ | 19,830 | $ | 7,235 | 36.5 | % | |||||||||||||||
| Net earnings per diluted share | 0.14 | 0.10 | 0.04 | 40.0 | % | ||||||||||||||||||
41
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
| For the Nine Months Ended | Increase/(Decrease) | ||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Contractual rental amounts billed for operating leases | $ | 302,598 | $ | 289,881 | $ | 12,717 | 4.4 | % | |||||||||||||||
Adjustment to recognize contractual operating lease billings on a straight-line basis | 16,952 | 15,720 | 1,232 | 7.8 | % | ||||||||||||||||||
| Net write-offs of accrued rental income | (2,983) | (2,556) | (427) | (16.7) | % | ||||||||||||||||||
| Variable rental amounts earned | 2,130 | 1,901 | 229 | 12.0 | % | ||||||||||||||||||
| Earned income from direct financing leases | 2,036 | 2,063 | (27) | (1.3) | % | ||||||||||||||||||
| Interest income from sales-type leases | 354 | 43 | 311 | >100% | |||||||||||||||||||
| Operating expenses billed to tenants | 15,491 | 15,292 | 199 | 1.3 | % | ||||||||||||||||||
| Other income from real estate transactions | 183 | 985 | (802) | (81.4) | % | ||||||||||||||||||
Adjustment to revenue recognized for uncollectible rental amounts billed, net | (917) | (3,659) | 2,742 | 74.9 | % | ||||||||||||||||||
| Total lease revenues, net | $ | 335,844 | $ | 319,670 | $ | 16,174 | 5.1 | % | |||||||||||||||
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
| For the Nine Months Ended | Increase/(Decrease) | ||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Depreciation and amortization | $ | 122,318 | $ | 113,192 | $ | 9,126 | 8.1 | % | |||||||||||||||
| Property and operating expense | 16,688 | 17,976 | (1,288) | (7.2) | % | ||||||||||||||||||
| General and administrative | 29,216 | 28,058 | 1,158 | 4.1 | % | ||||||||||||||||||
| Provision for impairment of investment in rental properties | 35,067 | 31,311 | 3,756 | 12.0 | % | ||||||||||||||||||
| Total operating expenses | $ | 203,289 | $ | 190,537 | $ | 12,752 | 6.7 | % | |||||||||||||||
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.
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Provision for impairment of investment in rental properties
The following table presents the impairment charges for the respective periods:
| For the Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in thousands, except number of properties) | 2025 | 2024 | |||||||||
| Number of properties | 18 | 17 | |||||||||
| Carrying value prior to impairment charge | $ | 104,759 | $ | 111,303 | |||||||
| Fair value | 69,693 | 79,992 | |||||||||
| Impairment charge | $ | 35,067 | $ | 31,311 | |||||||
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)
| For the Nine Months Ended | |||||||||||||||||||||||
| September 30, | Increase/(Decrease) | ||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Other income (expenses) | |||||||||||||||||||||||
| Interest income | $ | 403 | $ | 952 | $ | (549) | (57.7) | % | |||||||||||||||
| Interest expense | (69,416) | (54,512) | $ | 14,904 | 27.3 | % | |||||||||||||||||
| Gain on sale of real estate | 4,230 | 64,956 | $ | (60,726) | (93.5) | % | |||||||||||||||||
| Income taxes | (763) | (649) | $ | 114 | 17.6 | % | |||||||||||||||||
| Other income (expenses) | (2,620) | 1,502 | $ | (4,122) | > 100.0 % | ||||||||||||||||||
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”)
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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
| For the Nine Months Ended | Increase/(Decrease) | ||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||
| (in thousands, except per share data) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Net income | $ | 64,388 | $ | 141,382 | $ | (76,994) | (54.5) | % | |||||||||||||||
| Net earnings per diluted share | 0.33 | 0.72 | (0.39) | (54.2) | % | ||||||||||||||||||
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.
Liquidity and Capital Resources
General
We acquire real estate using a combination of debt and equity capital, cash from operations that is not otherwise distributed to our stockholders, and proceeds from dispositions of real estate properties. Our focus is on maximizing the risk-adjusted return to our stockholders through an appropriate balance of debt and equity in our capital structure. We are committed to maintaining an investment grade balance sheet through active management of our leverage profile and overall liquidity position. We believe our leverage strategy has allowed us to take advantage of the lower cost of debt while simultaneously strengthening our balance sheet, as evidenced by our current investment grade credit ratings of ‘BBB’ from S&P and ‘Baa2’ from Moody’s. We seek to maintain on a sustained basis a Leverage Ratio that is generally less than 6.0x. As of September 30, 2025, we had total debt outstanding of $2.4 billion, Net Debt of $2.3 billion, Pro Forma Net Debt of $2.2 billion, a Net Debt to Annualized Adjusted EBITDAre ratio of 5.7x, and a Pro Forma Net Debt to Annualized Adjusted EBITDAre ratio of 5.4x.
Net Debt, Pro Forma Net Debt, and Annualized Adjusted EBITDAre are non-GAAP financial measures, Annualized Adjusted EBITDAre, and Pro Forma Net Debt to Annualized Adjusted EBITDAre are calculated based upon EBITDA, EBITDAre, Adjusted EBITDAre, and Pro Forma Adjusted EBITDAre each of which is also a non-GAAP financial measure. Refer to Non-GAAP Measures below for further details concerning our calculation of non-GAAP measures and reconciliations to the comparable GAAP measure.
Liquidity/REIT Requirements
Liquidity is a measure of our ability to meet potential cash requirements, including our ongoing commitments to repay debt, fund our operations, acquire and develop properties, make distributions to our stockholders, and other general business needs. As a REIT, we are required to distribute to our stockholders at least 90% of our REIT taxable income determined without regard to the dividends paid deduction and excluding net capital gains, on an annual basis. As a result, it is unlikely that we will be able to retain substantial cash balances to meet our long-term liquidity needs, including repayment of debt and the acquisition of additional properties, from our annual taxable income. Instead, we expect to meet our long-term liquidity needs primarily by relying upon external sources of capital and proceeds from selective property dispositions.
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Short-term Liquidity Requirements
Our short-term liquidity requirements consist primarily of funds necessary to pay for our operating expenses, including our general and administrative expenses as well as interest payments on our outstanding debt, to pay distributions, to fund our acquisitions that are under control or expected to close within a short time period, and to pay for commitments to fund build-to-suit developments, revenue generating capital expenditures, and transitional capital investments. Under leases where we are required to bear the cost of structural repairs and replacements, we do not currently anticipate making significant capital expenditures or incurring other significant property costs, including as a result of inflationary pressures in the current economic environment, because of the strong occupancy levels across our portfolio and the net lease nature of our leases. We expect to meet our short-term liquidity requirements primarily from cash and cash equivalents balances and net cash provided by operating activities, supplemented by borrowings under our Revolving Credit Facility and capital recycled through selective property dispositions. We use cash on hand and borrowings under our Revolving Credit Facility to initially fund investments, which are subsequently repaid or replaced with proceeds from our equity and debt capital markets activities as well as proceeds from dispositions.
As detailed in the contractual obligations table below, we have approximately $332.7 million of expected obligations due throughout the remainder of 2025, consisting of $248.4 million of commitments to fund investments, $58.7 million of dividends declared, $24.8 million of projected interest expense, $0.5 million of mortgage payments and amortization, and $0.4 million of lessee obligations. We expect our cash provided by operating activities, as discussed below, will be sufficient to pay for our current obligations, including interest, mortgage amortization, and lessee obligations. We expect to pay for commitments to fund investments and our dividends declared using our available cash on hand and borrowings from our Revolving Credit Facility. As of September 30, 2025, we have $904.2 million of available capacity under our Revolving Credit Facility.
Long-term Liquidity Requirements
Our long-term liquidity requirements consist primarily of funds necessary to repay debt and invest in additional revenue generating properties and build-to-suit developments. We expect to source debt capital from unsecured term loans from commercial banks, revolving credit facilities, private placement senior unsecured notes, and public bond offerings.
The source and mix of our debt capital in the future will be impacted by market conditions as well as our continued focus on lengthening our debt maturity profile to better align with our portfolio’s long-term leases, staggering debt maturities to reduce the risk that a significant amount of debt will mature in any single year in the future, and managing our exposure to interest rate risk. We have no material debt maturities until 2027, as detailed in the table below.
We expect to meet our long-term liquidity requirements primarily from borrowings under our Revolving Credit Facility, future debt and equity financings, as well as proceeds from dispositions. Our ability to access these capital sources may be impacted by unfavorable market conditions, particularly in the debt and equity capital markets, that are outside of our control. In addition, our success will depend on our operating performance, our borrowing restrictions, our degree of leverage, and other factors. Our acquisition growth strategy significantly depends on our ability to obtain acquisition financing on favorable terms. We seek to reduce the risk that long-term debt capital may be unavailable to us by strengthening our balance sheet by investing in real estate with creditworthy tenants and lease guarantors, and by maintaining an appropriate mix of debt and equity capitalization. We also, from time to time, obtain or assume non-recourse mortgage financing from banks and insurance companies secured by mortgages on the corresponding specific property subject to limitations imposed by our Revolving Credit Facility covenants and our investment grade credit rating.
Equity Capital Resources
Our equity capital is primarily provided through our at-the-market common equity offering program (“ATM Program”), as well as follow-on equity offerings. Under the terms of our ATM Program we may, from time to time, publicly offer and sell shares of our common stock having an aggregate gross sales price of up to $400.0 million. The ATM Program provides for forward sale agreements, which enable us to set the price of shares upon pricing the offering, while delaying the issuance of shares and the receipt of the net proceeds. During the year ended December 31, 2024, in connection with forward sales agreements provided for under the ATM Program, we sold 2,187,700 shares of common stock at a weighted average price of $18.29 per share, subject to certain adjustments. We expect to settle the outstanding shares of these forward sale agreements in the fourth quarter of 2025. Our estimated net proceeds of these forward sale agreements, assuming physical settlement for cash as of September 30, 2025, is approximately $37.3 million. We have not settled any part of these forward sales agreements as of September 30, 2025. After considering the shares sold, we have $360.0 million of capacity remaining under the ATM Program as of September 30, 2025.
Our public offerings have been used to repay debt, fund acquisitions, and for other general corporate purposes.
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Unsecured Indebtedness as of September 30, 2025
The following table sets forth our outstanding Revolving Credit Facility, unsecured term loans and senior unsecured notes at September 30, 2025:
| (in thousands, except interest rates) | Outstanding Balance | Interest Rate | Maturity Date | ||||||||||||||
| Revolving Credit Facility | $ | 95,824 | Applicable reference rate + 0.85% (a) | Mar. 2029 (d) | |||||||||||||
| Unsecured term loans: | |||||||||||||||||
| 2027 Unsecured Term Loan | 200,000 | daily simple adjusted SOFR + 0.95% (b) | Aug. 2027 | ||||||||||||||
| 2028 Unsecured Term Loan | 500,000 | one-month adjusted SOFR + 0.95% (c) | Mar. 2028 (e) | ||||||||||||||
| 2029 Unsecured Term Loan | 300,000 | daily simple adjusted SOFR + 1.25% (b) | Aug. 2029 | ||||||||||||||
| Total unsecured term loans | 1,000,000 | ||||||||||||||||
| Unamortized debt issuance costs, net | (5,450) | ||||||||||||||||
| Total unsecured term loans, net | 994,550 | ||||||||||||||||
| Senior unsecured notes: | |||||||||||||||||
| 2027 Senior Unsecured Notes - Series A | 150,000 | 4.84% | Apr. 2027 | ||||||||||||||
| 2028 Senior Unsecured Notes - Series B | 225,000 | 5.09% | Jul. 2028 | ||||||||||||||
| 2030 Senior Unsecured Notes - Series C | 100,000 | 5.19% | Jul. 2030 | ||||||||||||||
| 2031 Senior Unsecured Public Notes | 375,000 | 2.60% | Sep. 2031 | ||||||||||||||
2032 Senior Unsecured Public Notes | 350,000 | 5.00% | Nov. 2032 | ||||||||||||||
| Total senior unsecured notes | 1,200,000 | ||||||||||||||||
| Unamortized debt issuance costs and original issuance discount, net | (9,685) | ||||||||||||||||
| Total senior unsecured notes, net | 1,190,315 | ||||||||||||||||
| Total unsecured debt | $ | 2,280,689 | |||||||||||||||
(a)At September 30, 2025, a balance of $24.0 million was subject to daily simple SOFR. The remaining balance of $100.0 million Canadian Dollars (“CAD”) borrowings remeasured to $71.8 million United States Dollars (“USD”), and was subject to daily simple CORRA of 2.56% at September 30, 2025.
(b)At September 30, 2025, overnight SOFR was 4.24%.
(c)At September 30, 2025, one-month SOFR was 4.13%.
(d)Our Revolving Credit Facility contains two six-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.0625% of the revolving commitments.
(e)Our 2028 unsecured term loan contains two twelve-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.125% of the aggregate principal amount of the loans outstanding under the 2028 term loan facility.
On September 26, 2025, we completed a public offering of $350.0 million 5.00% senior unsecured notes due in 2032 (the "2032 Senior Unsecured Public Notes"), issued at 99.151% of the principal amount. The 2032 Senior Unsecured Public Notes require semi-annual interest payments through the maturity date of November 1, 2025, unless earlier redeemed. The 2032 Senior Unsecured Public Notes can be redeemed at par within two months of their respective maturities, or the Company can call the notes at any time for the principal, accrued interest, and a make-whole amount based upon the applicable government bond yield plus 20 basis points. The proceeds were used to repay borrowings on the unsecured revolving credit facility, to fund investments in real estate, and for general corporate purposes.
On February 28, 2025, we amended and restated the Revolving Credit Facility, extending the maturity date to March 31, 2029, and increasing the accordion feature that increases the aggregate facility size from $1.5 billion to $2.5 billion. All remaining terms of the Revolving Credit Facility remained the same.
On February 28, 2025, we entered into a new unsecured term loan for $400.0 million that matures in March 2028 (the “2028 Unsecured Term Loan”), the proceeds of which were used to repay the $400.0 million 2026 Unsecured Term Loan. The 2028 Unsecured Term Loan allowed us to draw an additional $100.0 million, on May 28, 2025, the proceeds of which were used to repay a portion of the revolving credit facility. Borrowings under the 2028 Unsecured Term Loan are subject to interest only payments at variable rates equal to RFR plus a margin based on our credit rating, ranging between 0.800% and 1.600% per annum. Based on our current credit rating, the applicable margin was 0.950% as of September 30, 2025.
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Debt Covenants
We are subject to various covenants and financial reporting requirements pursuant to our debt facilities, which are summarized below. As of September 30, 2025, we believe we were in compliance with all of our covenants on all outstanding borrowings. In the event of default, either through default on payments or breach of covenants, we may be restricted from paying dividends to our stockholders in excess of dividends required to maintain our REIT qualification. For each of the previous three years, we paid dividends out of our cash flows from operations in excess of the distribution amounts required to maintain our REIT qualification.
Contractual Obligations
The following table provides information with respect to our contractual commitments and obligations as of September 30, 2025 (in thousands). Refer to the discussion in the Liquidity and Capital Resources section above for further discussion of our short and long-term obligations.
| Year of Maturity | Revolving Credit Facility (a) | Mortgages | Term Loans | Senior Notes | Interest Expense (c) | Dividends (d) | Commitments to Fund Investments (e) | Lessee Obligations (f) | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | — | $ | 488 | $ | — | $ | — | $ | 24,845 | $ | 58,665 | $ | 248,368 | $ | 380 | $ | 332,746 | ||||||||||||||||||||||||||||||||||||||
| 2026 | — | 16,843 | — | — | 97,406 | — | 155,672 | 1,523 | 271,444 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2027 | — | 1,596 | 200,000 | 150,000 | 89,168 | — | — | 1,469 | 442,233 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2028 | — | 38,278 | 500,000 | (b) | 225,000 | 55,382 | — | — | 1,352 | 820,012 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2029 | 95,824 | — | 300,000 | — | 38,355 | — | — | 1,412 | 435,591 | |||||||||||||||||||||||||||||||||||||||||||||||
| Thereafter | — | — | — | 825,000 | 68,765 | — | — | 34,140 | 927,905 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 95,824 | $ | 57,205 | $ | 1,000,000 | $ | 1,200,000 | $ | 373,921 | $ | 58,665 | $ | 404,040 | $ | 40,276 | $ | 3,229,931 | ||||||||||||||||||||||||||||||||||||||
(a)Our Revolving Credit Facility contains two six-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.0625% of the revolving commitments.
(b)Our 2028 Unsecured Term Loan contains two twelve-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.125% of the aggregate principal amount of the loans outstanding under the 2028 term loan facility.
(c)Interest expense is projected based on the outstanding borrowings and interest rates in effect as of September 30, 2025. This amount includes the impact of interest rate swap agreements.
(d)Amounts include dividends declared as of September 30, 2025 of $0.29 per common share and OP Unit. Future undeclared dividends have been excluded.
(e)Amounts include acquisitions under control, defined as under contract or executed letter of intent, and commitments to fund revenue generating capital expenditures, and both current in-process developments and under control development opportunities.
(f)Represents our contractual lease obligations as a lessee, primarily including our corporate headquarters and ground leases at our rental properties or properties under development. Our tenants are responsible for paying the rent under these ground leases at our stabilized assets. In the event our tenant fails to pay the ground lease rent, we are primarily responsible.
At September 30, 2025 investment in rental property with a net book value of $81.4 million was pledged as collateral against our mortgages.
In the normal course of business, we enter into various types of commitments to purchase real estate properties. These commitments are generally subject to our customary due diligence process and, accordingly, a number of specific conditions must be met before we are obligated to purchase the properties.
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Derivative Instruments and Hedging Activities
We are exposed to interest rate risk arising from changes in interest rates on the floating-rate borrowings under our unsecured credit facilities. Borrowings pursuant to our unsecured credit facilities bear interest at floating rates based on SOFR or CORRA plus an applicable margin. Accordingly, fluctuations in market interest rates may increase or decrease our interest expense, which will in turn, increase or decrease our net income and cash flow.
We attempt to manage the interest rate risk on variable rate borrowings by entering into interest rate swaps. As of September 30, 2025, we had 26 effective and two forward-starting interest rate swaps with an aggregate notional amount of $966.8 million. Under the effective swap agreements, we receive monthly payments from the counterparties equal to the related variable interest rates multiplied by the outstanding notional amounts. In turn, we pay the counterparties each month an amount equal to a fixed interest rate multiplied by the related outstanding notional amounts. The intended net impact of these transactions is that we pay a fixed interest rate on our variable-rate borrowings. The forward-starting swap arrangements are effective during December 2025 and mature in 2030. The interest rate swaps have been designated by us as cash flow hedges for accounting purposes and are reported at fair value. We assess, both at inception and on an ongoing basis, the effectiveness of our qualifying cash flow hedges. We have not entered, and do not intend to enter, into derivative or interest rate transactions for speculative purposes.
In addition, we own investments in Canada, and as a result are subject to risk from the effects of exchange rate movements in the Canadian dollar, which may affect future costs and cash flows. We funded a significant portion of our Canadian investments through Canadian dollar borrowings under our Revolving Credit Facility, which is intended to act as a natural hedge against our Canadian dollar investments. The Canadian dollar Revolving Credit Facility borrowings are remeasured each reporting period, with the unrealized foreign currency gains and losses flowing through earnings. These unrealized foreign currency gains and losses do not impact our cash flows from operations until settled, and are expected to directly offset the changes in the value of our net investments as a result of changes in the Canadian dollar. Our Canadian investments are recorded at their historical exchange rates, and therefore are not impacted by changes in the value of the Canadian dollar.
Cash Flows
Cash and cash equivalents and restricted cash totaled $83.3 million and $11.2 million at September 30, 2025 and September 30, 2024, respectively. The table below shows information concerning cash flows for the nine months ended September 30, 2025 and 2024:
| For the Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Net cash provided by operating activities | $ | 214,929 | $ | 212,342 | |||||||
| Net cash used in investing activities | (390,647) | (87,041) | |||||||||
| Net cash provided by (used in) financing activities | 243,045 | (134,715) | |||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | 67,327 | $ | (9,414) | |||||||
The increase in net cash provided by operating activities was primarily due to increased contractual rents related to rent escalations and growth in our real estate portfolio.
The increase in cash used in investing activities was primarily due to a decrease in disposition volume and proceeds and an increase in build-to-suit development investment, partially offset by a decrease in acquisition investment activity during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
The increase in net cash provided by financing activities during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, mainly reflects an increase in net proceeds from unsecured term loans and senior unsecured notes.
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Non-GAAP Measures
FFO, Core FFO, and AFFO
We compute Funds From Operations (“FFO”) in accordance with the standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”), the worldwide representative voice for REITs and publicly traded real estate companies with an interest in the U.S. real estate and capital markets. Nareit defines FFO as GAAP net income or loss adjusted to exclude net gains (losses) from sales of certain depreciated real estate assets, depreciation and amortization expense from real estate assets, and impairment charges related to certain previously depreciated real estate assets. FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers, primarily because it excludes the effect of real estate depreciation and amortization and net gains (losses) on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions.
We compute Core Funds From Operations (“Core FFO”) by adjusting FFO, as defined by Nareit, to exclude certain GAAP income and expense amounts that we believe are infrequently recurring, unusual in nature, or not related to its core real estate operations, including write-offs or recoveries of accrued rental income, lease termination fees and other non-core income from real estate transactions, cost of debt extinguishment, unrealized and realized gains or losses on foreign currency transactions, severance and employee transition costs, and other extraordinary items. Exclusion of these items from similar FFO-type metrics is common within the equity REIT industry, and management believes that presentation of Core FFO provides investors with a metric to assist in their evaluation of our operating performance across multiple periods and in comparison to the operating performance of our peers, because it removes the effect of unusual items that are not expected to impact our operating performance on an ongoing basis.
We compute Adjusted Funds From Operations (“AFFO”), by adjusting Core FFO for certain revenues and expenses that are non-cash or unique in nature, including straight-line rents, amortization of lease intangibles, adjustment to provision for credit losses, amortization of debt issuance costs, non-capitalized transaction costs such as acquisition costs related to deals that failed to transact, loss on interest rate swaps and other non-cash interest expense, deferred taxes, stock-based compensation, and other specified non-cash items. We believe that excluding such items assists management and investors in distinguishing whether changes in our operations are due to growth or decline of operations at our properties or from other factors. We use AFFO as a measure of our performance when we formulate corporate goals, and is a factor in determining management compensation. We believe that AFFO is a useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by non-cash revenues or expenses.
Specific to our adjustment for straight-line rents, our leases include cash rents that increase over the term of the lease to compensate us for anticipated increases in market rental rates over time. Our leases do not include significant front-loading or back-loading of payments, or significant rent-free periods. Therefore, we find it useful to evaluate rent on a contractual basis as it allows for comparison of existing rental rates to market rental rates.
FFO, Core FFO, and AFFO may not be comparable to similarly titled measures employed by other REITs, and comparisons of our FFO, Core FFO, and AFFO with the same or similar measures disclosed by other REITs may not be meaningful.
Neither the SEC nor any other regulatory body has passed judgment on the acceptability of the adjustments to FFO that we use to calculate Core FFO and AFFO. In the future, the SEC, Nareit or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and in response to such standardization we may have to adjust our calculation and characterization of Core FFO and AFFO accordingly.
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The following table reconciles net income (which is the most comparable GAAP measure) to FFO, Core FFO, and AFFO:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| (in thousands, except per share data) | September 30, 2025 | June 30, 2025 | September 30, 2025 | September 30, 2024 | |||||||||||||||||||
| Net income | $ | 27,065 | $ | 19,830 | $ | 64,388 | $ | 141,382 | |||||||||||||||
| Real property depreciation and amortization | 40,164 | 42,492 | 122,066 | 112,942 | |||||||||||||||||||
| Gain on sale of real estate | (3,259) | (566) | (4,230) | (64,956) | |||||||||||||||||||
| Provision for impairment on investment in rental properties | 6,999 | 11,939 | 35,067 | 31,311 | |||||||||||||||||||
| FFO | $ | 70,969 | $ | 73,695 | $ | 217,291 | $ | 220,679 | |||||||||||||||
| Net write-offs of accrued rental income | 755 | 3 | 2,987 | 2,556 | |||||||||||||||||||
Other non-core income from real estate transactions | (27) | (46) | (137) | (887) | |||||||||||||||||||
| Cost of debt extinguishment | — | — | 166 | — | |||||||||||||||||||
| Severance and employee transition costs | 1 | 53 | 55 | 199 | |||||||||||||||||||
Other (income) expenses (a) | (1,312) | 3,445 | 2,454 | (1,502) | |||||||||||||||||||
| Core FFO | $ | 70,386 | $ | 77,150 | $ | 222,816 | $ | 221,045 | |||||||||||||||
| Straight-line rent adjustment | (4,960) | (5,586) | (16,452) | (15,341) | |||||||||||||||||||
| Adjustment to provision for credit losses | — | (13) | (13) | (17) | |||||||||||||||||||
| Amortization of debt issuance costs | 1,357 | 1,328 | 3,922 | 2,949 | |||||||||||||||||||
| Non-capitalized transaction costs | 125 | 142 | 383 | 653 | |||||||||||||||||||
| Realized gain or loss on interest rate swaps and other non-cash interest expense | 6,116 | 7 | 6,126 | 216 | |||||||||||||||||||
| Amortization of lease intangibles | (1,198) | (1,191) | (3,453) | (3,422) | |||||||||||||||||||
| Stock-based compensation | 2,488 | 2,471 | 7,105 | 5,377 | |||||||||||||||||||
| AFFO | $ | 74,314 | $ | 74,308 | $ | 220,434 | $ | 211,460 | |||||||||||||||
(a)Amount includes $1.3 million and $(3.4) million of unrealized foreign exchange gain (loss) for the three months ended September 30, 2025 and June 30, 2025, respectively, and $(2.4) million and $1.5 million of unrealized foreign exchange (loss) gain for the nine months ended September 30, 2025 and September 30, 2024, respectively, primarily associated with our Canadian dollar denominated revolving borrowings.
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EBITDA, EBITDAre, Adjusted EBITDAre, Pro Forma Adjusted EBITDAre, Annualized EBITDAre, Annualized Adjusted EBITDAre, and Pro Forma Annualized Adjusted EBITDAre
We compute EBITDA as earnings before interest, income taxes and depreciation and amortization. EBITDA is a measure commonly used in our industry. We believe that this ratio provides investors and analysts with a measure of our performance that includes our operating results unaffected by the differences in capital structures, capital investment cycles and useful life of related assets compared to other companies in our industry. We compute EBITDAre in accordance with the definition adopted by Nareit, as EBITDA excluding gains (losses) from the sales of depreciable property and provisions for impairment on investment in real estate. We believe EBITDA and EBITDAre are useful to investors and analysts because they provide important supplemental information about our operating performance exclusive of certain non-cash and other costs. EBITDA and EBITDAre are not measures of financial performance under GAAP, and our EBITDA and EBITDAre may not be comparable to similarly titled measures of other companies. You should not consider our EBITDA and EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.
We are focused on a disciplined and targeted investment strategy, together with active asset management that includes selective sales of properties. We manage our leverage profile using a ratio of Net Debt to Annualized Adjusted EBITDAre, and Pro Forma Net Debt to Annualized Adjusted EBITDAre, each discussed further below, which we believe is a useful measure of our ability to repay debt and a relative measure of leverage, and is used in communications with our lenders and rating agencies regarding our credit rating. As we fund new investments using our unsecured Revolving Credit Facility, our leverage profile and Net Debt will be immediately impacted by current quarter investments. However, the full benefit of EBITDAre from new investments will not be received in the same quarter in which the properties are acquired. Additionally, EBITDAre for the quarter includes amounts generated by properties that have been sold during the quarter. Accordingly, the variability in EBITDAre caused by the timing of our investments and dispositions can temporarily distort our leverage ratios. We adjust EBITDAre (“Adjusted EBITDAre”) for the most recently completed quarter (i) to recalculate as if all investments and dispositions had occurred at the beginning of the quarter, (ii) to exclude certain GAAP income and expense amounts that are either non-cash, such as cost of debt extinguishments, realized or unrealized gains and losses on foreign currency transactions, or gains on insurance recoveries, or that we believe are one time, or unusual in nature because they relate to unique circumstances or transactions that had not previously occurred and which we do not anticipate occurring in the future, and (iii) to eliminate the impact of lease termination fees and other items that are not a result of normal operations. While investments in build-to-suit developments have an immediate impact to Net Debt, we do not make an adjustment to EBITDAre until the quarter in which the lease commences. We define our Pro Forma Adjusted EBITDAre as Adjusted EBITDAre adjusted to show the impact of estimated contractual revenues based on in-process development spend to-date. Our Pro Forma Net Debt is defined as Net Debt adjusted for estimated net proceeds from forward sale agreements that have not settled as if they have been physically settled for cash as of the period presented. We then annualize quarterly Adjusted EBITDAre and Pro Forma Adjusted EBITDAre by multiplying them by four (“Annualized Adjusted EBITDAre” and “Annualized Pro Forma Adjusted EBITDAre”). You should not unduly rely on this measure as it is based on assumptions and estimates that may prove to be inaccurate. Our actual reported EBITDAre for future periods may be significantly different from our Annualized Adjusted EBITDAre. Adjusted EBITDAre and Annualized Adjusted EBITDAre are not measurements of performance under GAAP, and our Adjusted EBITDAre and Annualized Adjusted EBITDAre may not be comparable to similarly titled measures of other companies. You should not consider our Adjusted EBITDAre and Annualized Adjusted EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.
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The following table reconciles net income (which is the most comparable GAAP measure) to EBITDA, EBITDAre, Adjusted EBITDAre, and Pro Forma Adjusted EBITDAre. Information is also presented with respect to Annualized EBITDAre, Annualized Adjusted EBITDAre, and Pro Forma Annualized Adjusted EBITDAre:
| For the Three Months Ended | |||||||||||||||||
| (in thousands) | September 30, 2025 | June 30, 2025 | September 30, 2024 | ||||||||||||||
| Net income | $ | 27,065 | $ | 19,830 | $ | 37,268 | |||||||||||
| Depreciation and amortization | 40,246 | 42,575 | 38,016 | ||||||||||||||
| Interest expense | 28,230 | 21,112 | 18,178 | ||||||||||||||
| Income taxes | 208 | 199 | 291 | ||||||||||||||
| EBITDA | $ | 95,749 | $ | 83,716 | $ | 93,753 | |||||||||||
| Provision for impairment of investment in rental properties | 6,999 | 11,939 | 1,059 | ||||||||||||||
| Gain on sale of real estate | (3,259) | (566) | (2,441) | ||||||||||||||
| EBITDAre | $ | 99,489 | $ | 95,089 | $ | 92,371 | |||||||||||
Adjustment for current quarter investment activity (a) | 1,797 | 573 | 4,080 | ||||||||||||||
Adjustment for current quarter disposition activity (b) | (257) | (490) | (66) | ||||||||||||||
Adjustment to exclude non-recurring and other expenses (c) | (177) | (332) | (201) | ||||||||||||||
| Adjustment to exclude net write-offs of accrued rental income | 755 | 3 | — | ||||||||||||||
| Adjustment to exclude realized / unrealized foreign exchange (gain) loss | (1,312) | 3,445 | 942 | ||||||||||||||
Adjustment to exclude other income from real estate transactions | (43) | (46) | (887) | ||||||||||||||
| Adjusted EBITDAre | $ | 100,252 | $ | 98,242 | $ | 96,239 | |||||||||||
Estimated revenues from developments (d) | 2,544 | 1,629 | — | ||||||||||||||
| Pro Forma Adjusted EBITDAre | $ | 102,796 | $ | 99,871 | $ | 96,239 | |||||||||||
| Annualized EBITDAre | $ | 397,956 | $ | 380,356 | $ | 369,484 | |||||||||||
| Annualized Adjusted EBITDAre | $ | 401,008 | $ | 392,968 | $ | 384,956 | |||||||||||
| Pro Forma Annualized Adjusted EBITDAre | $ | 411,184 | $ | 399,484 | $ | 384,956 | |||||||||||
(a)Reflects an adjustment to give effect to all investments during the quarter, including developments that have reached rent commencement, as if they had been made as of the beginning of the quarter.
(b)Reflects an adjustment to give effect to all dispositions during the quarter as if they had been sold as of the beginning of the quarter.
(c)Amount includes less than $0.2 million of accelerated lease intangible amortization for the three months ended September 30, 2025. Amount includes less than $0.4 million of accelerated lease intangible amortization for the three months ended June 30, 2025. Amount includes $0.2 million of forfeited stock-based compensation expense for the three months ended September 30, 2024.
(d)Represents estimated contractual revenues based on in-process development spend to-date.
Net Debt, Pro Forma Net Debt, Net Debt to Annualized EBITDAre, Net Debt to Annualized Adjusted EBITDAre, and Pro Forma Net Debt to Annualized Adjusted EBITDAre
We define Net Debt as gross debt (total reported debt plus debt issuance costs) less cash and cash equivalents and restricted cash. Our Pro Forma Net Debt is defined as Net Debt adjusted for estimated net proceeds from unsettled forward sale agreements as if they have been settled for cash as of the period presented. We believe that the presentation of Net Debt to Annualized EBITDAre and Net Debt to Annualized Adjusted EBITDAre is useful to investors and analysts because these ratios provide information about gross debt less cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using EBITDAre, and is used in communications with lenders and rating agencies regarding our credit rating. The following table reconciles total debt (which is the most comparable GAAP measure) to Net Debt, Pro
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Forma Net Debt, and presents the ratios of Net Debt to Annualized EBITDAre, Net Debt to Annualized Adjusted EBITDAre, and Pro Forma Net Debt to Annualized Adjusted EBITDAre, respectively:
| (in thousands) | September 30, 2025 | June 30, 2025 | September 30, 2024 | ||||||||||||||
| Debt | |||||||||||||||||
Revolving Credit Facility | $ | 95,824 | $ | 197,880 | $ | 125,482 | |||||||||||
| Unsecured term loans, net | 994,550 | 994,028 | 896,887 | ||||||||||||||
| Senior unsecured notes, net | 1,190,315 | 846,441 | 845,875 | ||||||||||||||
| Mortgages, net | 57,168 | 75,685 | 77,416 | ||||||||||||||
| Debt issuance costs | 15,171 | 9,578 | 7,314 | ||||||||||||||
| Gross Debt | 2,353,028 | 2,123,612 | 1,952,974 | ||||||||||||||
| Cash and cash equivalents | (81,966) | (20,784) | (8,999) | ||||||||||||||
| Restricted cash | (1,354) | (1,192) | (2,219) | ||||||||||||||
| Net Debt | $ | 2,269,708 | $ | 2,101,636 | $ | 1,941,756 | |||||||||||
Estimated net proceeds from forward equity agreements (a) | (37,257) | (37,722) | (38,983) | ||||||||||||||
| Pro Forma Net Debt | $ | 2,232,451 | $ | 2,063,914 | $ | 1,902,773 | |||||||||||
| Leverage Ratios: | |||||||||||||||||
| Net Debt to Annualized EBITDAre | 5.7x | 5.5x | 5.3x | ||||||||||||||
| Net Debt to Annualized Adjusted EBITDAre | 5.7x | 5.3x | 5.0x | ||||||||||||||
| Pro Forma Net Debt to Annualized Adjusted EBITDAre | 5.4x | 5.2x | 4.9x | ||||||||||||||
(a)Represents pro forma adjustment for estimated net proceeds from forward sale agreements that have not settled as if they have been physically settled for cash as of the period presented.
Critical Accounting Policies and Estimates
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses as well as other disclosures in the financial statements. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. These judgments affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, management evaluates its estimates and assumptions; however, actual results may differ from these estimates and assumptions, which in turn could have a material impact on our financial statements. A summary of our significant accounting policies and procedures are included in Note 2, “Summary of Significant Accounting Policies,” in the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. We believe there have been no significant changes during the three months ended September 30, 2025 to the items that we disclosed as our critical accounting policies and estimates in our 2024 Annual Report on Form 10-K.
Impact of Recent Accounting Pronouncements
For information on the impact of recent accounting pronouncements on our business, see Note 2 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We are exposed to certain market risks, one of the most predominant of which is a change in interest rates. Increases in interest rates can result in increased interest expense under our Revolving Credit Facility and other variable-rate debt. Increases in interest rates can also result in increased interest expense when our fixed rate debt and interest rate swaps mature. We attempt to manage interest rate risk by entering into long-term fixed rate debt, entering into interest rate swaps to convert certain variable-rate debt to a fixed rate, and staggering our debt maturities. We have designated the interest rate swaps as cash flow hedges for accounting purposes and they are reported at fair value. We have not entered, and do not intend to enter, into derivative or interest rate transactions for speculative purposes. Further information concerning our interest rate swaps can be found in Note 9 in our Condensed Consolidated Financial Statements contained elsewhere in this Quarterly Report on Form 10-Q.
Our fixed-rate debt includes our senior unsecured notes, mortgages, and variable-rate debt converted to a fixed rate with the use of interest rate swaps. Our fixed-rate debt had a carrying value and fair value of approximately $2.1 billion and $2.1 billion, respectively, as of September 30, 2025, of which $0.8 billion was swapped to a fixed rate by our use of interest rate swaps. Changes in market interest rates impact the fair value of our fixed-rate debt and interest rate swaps, but they have no impact on interest incurred or on cash flows. For instance, if interest rates were to increase and the fixed-rate debt balance were to remain constant, we would expect the fair value of our debt to decrease, similar to how the price of a bond decreases as interest rates rise. A 1% increase in market interest rates would have resulted in a decrease in the fair value of our fixed-rate debt of approximately $50.4 million as of September 30, 2025.
Borrowings pursuant to our Revolving Credit Facility and other variable-rate debt bear interest at rates based on the applicable reference rate plus an applicable margin, and totaled $1.1 billion as of September 30, 2025. Taking into account the effect of our interest rate swaps, a 1% increase or decrease in interest rates would have a corresponding $2.5 million increase or decrease in interest expense annually.
With the exception of our interest rate swap transactions, we have not engaged in transactions in derivative financial instruments or derivative commodity instruments.
Foreign Currency Exchange Rate Risk
We own investments in Canada, and as a result are subject to risk from the effects of exchange rate movements in the Canadian dollar, which may affect future costs and cash flows. We funded a significant portion of our Canadian investments through Canadian dollar borrowings under our Revolving Credit Facility, which is intended to act as a natural hedge against our Canadian dollar investments. The Canadian dollar Revolving Credit Facility borrowings are remeasured each reporting period, with the unrealized foreign currency gains and losses flowing through earnings. A 10% increase or decrease in the exchange rate between the Canadian dollar and USD would have a corresponding $7.2 million increase or decrease in unrealized foreign currency gain or loss. These unrealized foreign currency gains and losses do not impact our cash flows from operations until settled, and are expected to directly offset the changes in the value of our net investments as a result of changes in the Canadian dollar. Our Canadian investments are recorded at their historical exchange rates, and therefore are not impacted by changes in the value of the Canadian dollar.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of and for the quarter ended September 30, 2025, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective and were operating at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II – OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we are subject to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of our business. We are not currently a party to legal proceedings that we believe would reasonably be expected to have a material adverse effect on our business, financial condition, or results of operations. We are not aware of any material legal proceedings to which we or any of our subsidiaries are a party or to which any of our property is subject, nor are we aware of any such legal proceedings contemplated by government agencies.
Item 1A. Risk Factors.
Please refer to the risk factors disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025, and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, which was filed with the SEC on May 1, 2025 in which the risk factors were supplemented. There have been no further material changes.
Item 1B. Unresolved Staff Comments.
There are no unresolved staff comments.
Item 1C. Cybersecurity.
There have been no material changes for cybersecurity set forth in our 2024 Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None of our officers or directors adopted terminated
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Item 6. Exhibits
| No. | Description | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 3.3 | ||||||||
| 3.4 | ||||||||
| 3.5 | ||||||||
| 3.6 | ||||||||
| 4.1 | ||||||||
| 4.2 | ||||||||
4.3 | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1*† | ||||||||
| 32.2*† | ||||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
____________________________________________
*Filed herewith.
†In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BROADSTONE NET LEASE, INC. | |||||
Date: October 29, 2025 | /s/ John D. Moragne | ||||
| John D. Moragne | |||||
Chief Executive Officer (Principal Executive Officer) | |||||
Date: October 29, 2025 | /s/ Kevin M. Fennell | ||||
| Kevin M. Fennell | |||||
Executive Vice President and Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||
57
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(Rule 13a-14(a)/15d-14(a) Certification)
I, John D. Moragne, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Broadstone Net Lease, Inc. for the quarter ended September 30, 2025;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: October 29, 2025 | /s/ John D. Moragne | ||||
| John D. Moragne | |||||
Chief Executive Officer (Principal Executive Officer) | |||||
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(Rule 13a-14(a)/15d-14(a) Certification)
I, Kevin M. Fennell, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Broadstone Net Lease, Inc. for the quarter ended September 30, 2025;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: October 29, 2025 | /s/ Kevin M. Fennell | ||||
| Kevin M. Fennell | |||||
Executive Vice President and Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(Section 1350 Certification)
In connection with the Quarterly Report on Form 10-Q of Broadstone Net Lease, Inc. (the “Company”) for the quarter ended September 30, 2025 (the “Third Quarter 10-Q”), and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, John D. Moragne, Chief Executive Officer, certifies, to the best of his knowledge, that:
1.The Third Quarter 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and
2.The information contained in the Third Quarter 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 29, 2025 | /s/ John D. Moragne | ||||
| John D. Moragne Chief Executive Officer | |||||
The foregoing certification is being furnished solely to accompany the Quarterly Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(Section 1350 Certification)
In connection with the Quarterly Report on Form 10-Q of Broadstone Net Lease, Inc. (the “Company”) for the quarter ended September 30, 2025 (the “Third Quarter 10-Q”), and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Kevin M. Fennell, Executive Vice President and Chief Financial Officer of the Company, certifies, to the best of his knowledge, that:
1.The Third Quarter 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and
2.The information contained in the Third Quarter 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 29, 2025 | /s/ Kevin M. Fennell | ||||
| Kevin M. Fennell | |||||
| Executive Vice President and Chief Financial Officer and Treasurer | |||||
The foregoing certification is being furnished solely to accompany the Quarterly Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.