Broadstone Net Lease Q1 2026 Earnings Call - Build-to-Suit Pipeline Accelerates Amid Zoning Headwinds

Operator: Hello, welcome to Broadstone Net Lease’s first quarter 2026 earnings conference call. My name is Emily, and I’ll be your operator today. Please note that today’s call is being recorded. I will now turn the call over to Brent Maedl, Director of Corporate Finance and Investor Relations at Broadstone. Please go ahead.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease: Thank you everyone for joining us today for Broadstone Net Lease’s first quarter 2026 earnings call. On today’s call, you will hear prepared remarks from Chief Executive Officer, John Moragne, President and Chief Operating Officer, Ryan Albano, and Chief Financial Officer, Kevin Fennell. All three will be available for the Q&A portion of this call. As a reminder, the following discussion and answers to your questions contain forward-looking statements which are subject to risks and uncertainties that can cause actual results to defer materially due to a variety of factors. We caution you not to place undue reliance on these forward-looking statements. For a more detailed discussion of risk factors that may cause such differences, please refer to our SEC filings, including our Form 10-K for the year ended December 31, 2025. Note that such risk factors may be updated in our quarterly SEC filings.

Any forward-looking statements provided during this conference call are only made as of the date of this call. With that, I’ll turn the call over to John.

John Moragne, Chief Executive Officer, Broadstone Net Lease: Thank you, Brent. Good morning, everyone. After a strong finish to 2025, we carried that momentum into the first quarter of 2026, delivering 5.6% AFFO growth year-over-year, continuing to execute on our investment strategy and driving strong operational outcomes across our in-place portfolio. We advanced our committed build-to-suit platform through both existing and new relationships, adding over $90 million in new development projects year to date, invested over $60 million in a compelling acquisition, realized no bad debt during the quarter, and addressed nearly half of our 2026 lease maturities with a recapture rate of 119%. A strong start to the year.

Collectively, our results reflect the progress we have made executing on our core building blocks and underscore the strength of our high quality mission critical portfolio and the increasing visibility we are providing to long-term sustainable growth. In total, we deployed $171.9 million during the quarter, including $61.2 million in new property acquisitions, $99.4 million in build-to-suit developments, and $10.4 million in incremental investments in existing transitional capital projects. As previously announced earlier in the quarter, we added two additional build-to-suits, including a new state-of-the-art sub same-day distribution center located in Sarasota, Florida for Amazon, sourced through an existing developer relationship. We also added a retail development for Academy Sports in Magnolia, Texas, a rapidly growing suburb of Houston that was directly sourced through the tenant and delivered in partnership with a new developer relationship.

Continuing our momentum, subsequent to quarter end, and as we announced in our earnings release last night, we closed on the land and started funding a new pre-sort battery recycling facility for Tesla that will be located approximately three miles from the Gigafactory in Austin, Texas. Together, these three build-to-suit investments represent high-quality real estate paired with top-tier investment-grade quality tenants that blend to a first-year initial cash cap rate of 7.2% with attractive straight-line yields of 8.3%, a weighted average lease term of 14 years and valuations on each asset that are likely at least 75 to 100 basis points below our development yields, further demonstrating the value creation of our build-to-suit strategy.

As anticipated, on April 1st, the 2nd of two maintenance, repair, and overhaul hangars for Sierra Nevada Corporation rent commenced, supporting its continued work with the U.S. Air Force, replacing an aging fleet of Nightwatch planes. We are proud to be a part of this effort, I couldn’t be more pleased to have both projects reach stabilization on time and under our budgeted project investments, underscoring our team’s ability to execute on our strategy and create value for our shareholders, regardless of broader macroeconomic uncertainty and frequent market-moving headlines. With the completion of Sierra Nevada and the three new projects I just walked through, our build-to-suit pipeline remains in a strong position with approximately $382 million of high-quality developments scheduled to reach stabilization throughout 2026 and into 2027, providing visibility to over $28 million of new incremental ABR.

Additionally, our opportunity set remains robust, driven largely by existing relationships, and Ryan will go into more detail on our active build-to-suit pipeline in a few moments. During the quarter, we invested $61.2 million in a 60-acre campus, approximately 20 miles north of Boston, Massachusetts, tenanted by Charles River Laboratories, a leading global pharmaceutical and biotechnology contract research organization. The sale-leaseback investment includes a long-term 12-year net lease with initial cash rents of $1.5 million and annual rent increases of 3% and a short-term 1-year net lease with cash rents of $4 million for a blended 9% initial cash cap rate and 4 years of weighted average lease term. We intend to redevelop approximately 48 acres of the 60-acre campus that are subject to the short-term lease in partnership with the Sansone Group as part of our growing build-to-suit development program.

We think this transaction is yet another great example of creatively driving additional value. Turning to Project Triboro. As I said during our last call, our goal for 2026 is to advance three key work streams related to a potential data center development: zoning, power, and tenant identification. All three of these work streams continue to advance, and our goals and timelines for each have not changed. To date, we have invested approximately $106 million in the project through our transitional capital platform, maintaining meaningful optionality as we evaluate the best path forward.

The highest and best use for this site remains a hyperscale data center campus, and our backup option for a multi-building industrial build-to-suit development also remains intact. We continue to be immensely excited by this opportunity, and by the end of the year, we expect we will be able to decide our best path forward for this project, whether that be a powered land sale, a commitment to stay involved on a powered shell development, or a decision to pursue multi-building industrial development and communicate the same to our investors. I’m confident in our ability to deliver. Ryan will provide a more detailed update in his remarks, and you can expect we will provide relevant updates as we have them. Finally, to cap off a strong quarter of results and execution, I also want to highlight an important milestone for Broadstone Net Lease, our inclusion in the S&P 600 Index.

We view our inclusion as providing incremental support for our improving cost of equity capital and believe it will help expand our investor base over time with the increased amount daily liquidity has helped provide. We’ve been encouraged by improving market sentiment around REITs and the progress we’ve seen in our equity multiple. As our cost of equity improves, it expands our opportunity set and enhances our ability to fund growth in a disciplined and accreted manner. As you saw in our earnings release last night, we raised $71 million of equity under our ATM during the quarter at a weighted average price of $19.13, bringing total gross proceeds to approximately $82.5 million on a forward basis at a weighted average price of $19.02.

Going forward, we expect issuances to remain measured and opportunistic as we evaluate our cost of capital alongside our investment opportunities. With that, I’ll hand the call over to Ryan and Kevin to take you through some of these topics in greater detail.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease0: Thank you, John, and thank you all for joining us today. As John highlighted, the first quarter clearly demonstrated the effectiveness of our strategy and the strength of our team and portfolio. In today’s environment, we believe creativity and structuring is just as critical as sourcing. Our focus is on transactions where thoughtful structuring can materially enhance outcomes, driving higher yields, embedding growth, and protecting downside through multiple exit pathways. A strong example is the $61.2 million investment we completed this quarter with Charles River Laboratories in Wilmington, Massachusetts. The transaction involves the acquisition of a 60-acre campus approximately 20 miles north of Boston, delivering both a long-term accretive sale-leaseback and a strategically structured short-term investment with meaningful future value potential. The two leases together generate approximately $5.5 million of first-year cash rent, representing a blended initial cash cap rate of 9%.

As John noted, the first lease is a 12-year net lease with initial annual rent of $1.5 million and 3% annual rent escalations, nearly 100 basis points above our current and increasing weighted average rent growth. The second lease is a short-term lease with a term of 1 year covering approximately 48 acres of the campus. This shorter lease duration was intentional, allowing us to preserve near-term cash flow while maintaining flexibility to unlock value through redevelopment. Specifically, the site has the potential to support up to 440,000 buildable sq ft of industrial development. The campus benefits from a prime infill location with access to a population of more than 4 million people within a 30-mi radius, along with strong connectivity to major transportation corridors and labor pools, factors we believe underpin sustained long-term demand.

Importantly, we did not underwrite this as a single outcome investment. The 48 acre parcel provides flexibility for multiple build-to-suit opportunities, effectively extending our pipeline of committed development projects. While we actively pursue this upside, we are supported by a strong underlying land value and the optionality it affords, reinforcing our conviction in this investment. Overall, this transaction highlights our ability to leverage relationships and apply a creative, solutions-oriented approach to structuring investments that deliver attractive initial yields while positioning us to generate additional long-term value. As a broader update on our development pipeline, following the early and under budget delivery of the two MRO facilities for SNC, we currently have 11 in-process developments representing approximately $382 million of total projected investment.

These projects are expected to generate strong initial cash yields of 7.3% and weighted average straight-line yields of 8.4%, supported by a weighted average lease term of 12.9 years and annual rent escalations of 2.5%. Importantly, these tenant-driven developments are structured to mitigate traditional development risks, including construction timing and cost pressures. As we’ve discussed, build-to-suit development remains a core pillar of our differentiated strategy and a key driver of embedded growth visibility. We aim to consistently maintain an active, committed build-to-suit pipeline in the $350 million-$500 million range, and we continue to see a robust set of opportunities to support that run rate. Currently, we are actively evaluating approximately $1.3 billion of build-to-suit opportunities across both existing and new relationships, reinforcing our ability to drive visible long-term growth.

In the stabilized transaction market, we continue to see steady deal flow, including several larger portfolio opportunities, particularly within industrial. That said, we remain disciplined. In many cases, seller pricing expectations, particularly around cap rates, do not align with our view of the underlying risk profile, and we will not pursue volume at the expense of quality. Dispositions remain an important component of our capital allocation strategy. On a routine basis, we use dispositions to refine the portfolio and proactively manage credit, lease rollover, and sector exposure. Opportunistically, when market pricing allows us to recycle capital on an accretive basis, we will act. This was reflected in our $12 million disposition during the quarter at a 5.6% cap rate on an industrial asset with 7 years of remaining lease term.

Subsequent to quarter end, we completed the sale of 3 additional assets for total gross proceeds of $54.8 million, including 2 opportunistic dispositions totaling $50.4 million at a weighted average cap rate of 6.3%, as well as the sale of a small vacant asset as part of our ongoing portfolio management. Turning to our in-place portfolio, same-store performance remains strong with 2.8% year-over-year growth driven by contractual rent increases and successful re-leasing activity in prior periods. At the start of the year, we had 22 leases scheduled to expire in 2026. We have already addressed half of those leases, achieving a weighted average recapture rate of 119% and an average new lease term of 6 years on extended leases.

For the remaining 11 leases, representing approximately 2% of ABR, we are well underway in our leasing efforts and expect continued positive outcomes. Finally, with respect to our watch list, activity this quarter was relatively uneventful, reflecting the strength of our portfolio and proactive asset management efforts in recent years. As noted last quarter, Gardner-White Furniture assumed all 6 locations previously occupied by American Signature as part of its bankruptcy process. Since then, we have executed a new 10-year master lease across all 6 sites, further enhancing what was already a strong outcome. Shifting our focus to Project Triboro and building on John’s earlier update. It may be helpful to frame where we are in the overall development life cycle. Over the past several months, our efforts have been focused on advancing the site’s foundational elements while simultaneously progressing key work streams across power, zoning, and leasing.

This coordinated approach is intended to de-risk the project, preserve flexibility around ultimate use, and position us to respond efficiently as milestones are achieved and market opportunities continue to evolve. We are actively advancing the site to a pad-ready condition, including the installation of erosion and sediment controls, clearing and grubbing, mine remediation, and mass grading. This also involves completing the core civil infrastructure required to create developable pads, such as stormwater management systems, internal access roads, and underground utilities. Universal site work that must be completed regardless of whether the site is ultimately developed as a hyperscale data center campus or as multiple industrial buildings. We are approaching this site work in a deliberate phased manner, carefully sequencing activities to align with the project’s multi-phase nature and preserve maximum flexibility as we pursue value creation for our shareholders.

On the power side, this continues to be one of the defining attributes of the site. Importantly, the 1 gigawatt power commitment is supported by existing generation capacity, and we are not reliant on future power generation build-out to establish that supply. Our current focus is on coordinating the infrastructure required to transmit and deliver the power to the site, as well as developing the on-site infrastructure necessary to receive it as it becomes available. In this regard, PPL plans to construct a new substation and switchyard along with approximately 8 miles of new transmission lines. These upgrades are intended to support broader load growth and new customer demand, including Project Triborough, while also enhancing overall system reliability. PPL currently anticipates commencing construction in summer of 2027, with completion targeted for the summer of 2030.

At the site level, we plan to develop a dedicated substation to receive the delivered power, which we currently anticipate the first phase of energization consisting of 300 megawatts to commence between Q4 of 2027 and Q1 of 2028, with the additional 700 megawatts to follow thereafter. We remain in close and ongoing coordination with PPL and are actively working through the required electric and construction service agreements necessary to advance Project Triboro. With respect to zoning, in recent months, Allentown Borough has considered amending its zoning ordinance to expressly allow data centers in the CM2 district where Project Triboro is located. We understand Pennsylvania municipalities must accommodate all lawful land uses somewhere within their boundaries, including data centers, but may regulate them through standards such as siting rules, setbacks, and required studies and reports, which are typical for real estate development.

As drafted, Project Triborough aligns with the framework contemplated by the proposed amendment. At its most recent meeting, Borough Council chose not to adopt the amendment as written and instead started a process giving it up to 180 days to address data centers in the ordinance. We will continue working with the council on the amendment during this period. To protect our rights in the meantime, we filed a zoning permit application last week informally asserted that the proposed data center campus is permitted by right under the current ordinance and may proceed as planned. Accordingly, despite heightened attention on data center development, we remain confident in our path forward and do not expect any impact to our anticipated 2026 timeline. Finally, with respect to leasing efforts, we are currently engaged in active discussions with multiple hyperscale users that have expressed strong interest in Project Triborough.

We look forward to providing updates as these discussions progress and as we gain greater clarity on potential structures and timing. As John has consistently stated, our objective is to have clarity on the optimal path for Project Triboro by the end of 2026, based on the progress achieved relative to several milestones, including zoning, power and leasing, and remain focused on maximizing shareholder value while preserving optionality. With that, I will now turn the call over to Kevin.

Kevin Fennell, Chief Financial Officer, Broadstone Net Lease: Thank you, Ryan. During the quarter, we generated adjusted funds from operations of $76.9 million or $0.38 per share, representing a 5.6% increase over Q1 of 2025. Results benefited from strong same store rent growth of 2.8% and from recent investment activity and build-to-suits reaching stabilization. The quarter’s results also notably benefited from no lost rent realized during the quarter in lower non-reimbursable property expenses. G&A remains well controlled, with core expenses totaling $7.8 million during the first quarter. While this represents an increase of 5.4% year-over-year, this change was largely impacted by one-time or timing related expenses, including employer tax expense for stock vesting and professional services. We remain well on track to achieve our G&A guidance.

With respect to the balance sheet, we ended the quarter with pro forma leverage of 5.8 times, unchanged quarter-over-quarter. At quarter end, we had approximately $82.5 million of unsettled equity and nearly $600 million available on our revolver. With limited debt maturities through the first half of 2027, we maintain sufficient financial flexibility as we look ahead. Last week, our board of directors elected to maintain our $0.2925 dividend per share payable to holders of record as of June 30, 2026, on or before July 15. Lastly, we are maintaining our 2026 per share guidance range of $1.53-$1.57, with no changes to our key assumptions.

Despite no bad debt in the first quarter, we are also maintaining our full year assumption of 75 basis points of lost rent within our 2026 guidance and plan to revisit this assumption throughout the year. It’s always worth reminding everyone that our per share results for the year are sensitive to the timing, amount and mix of investment and disposition activity, as well as any capital market activities that may occur during the year. Please reference last night’s earnings release for additional details. We will now open the call up for questions.

Operator: Thank you. We will now begin the question and answer session. Our first question today comes from Anthony Paolone with J.P. Morgan.

Anthony Paolone, Analyst, J.P. Morgan: Great. Thanks. Good morning. Just on Project Triboro, you mentioned that there will be some infrastructure improvements there that are done irrespective of what the ultimate use of the land is. Are you all responsible for that? Just wondering, like, what that capital commitment might be in the meantime.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease0: Sure. This is Ryan. Yes, when we’re talking about that universal site work, that’s site work and infrastructure improvement that we would be looking at regardless of whether we were going to proceed with data center usage or industrial usage. The infrastructure that would relate specifically to the data center itself, you know, I think the majority of that cost is being pushed off at this point until we’re a little further along in our decision-making process.

Anthony Paolone, Analyst, J.P. Morgan: Okay. It sounds like the rest of those costs are fairly small, or should we expect like some bigger checks to be written in the near term?

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease0: Sure. I’d say, you know, total, at the moment, probably for this year, less than $15 million.

Anthony Paolone, Analyst, J.P. Morgan: Okay, got it. Then just my other one relates to the Boston acquisition. Can you talk a bit more of, you know, around just conviction level that you’ll find some tenants there to take on that risk, Sansone’s role and all of that? Also just as you step back and do like a transaction like that, Triborough for instance, just your appetite to take on, you know, what I guess is sort of like land risk, for future type of build-to-suits?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah. Thanks, Tony. This is John. I think it’s a great example of the ways that our strategy can unlock value by creatively structuring solutions for our developer partners and clients. This isn’t the first time that we’ve done something that’s a little more creatively structured with Sansone. We did it with Sunset Hills. We’re doing it with Triborough. We have it with Charles River, and we have other things in the hopper that we’re considering with them. They continue to grow as a fantastic partner for us with our business as we’re helping them grow theirs.

This project was particularly attractive to us because there were certain things that needed to be solved for the overall transaction to move forward for Charles River. They needed a long-term sale-leaseback for the assets that they were looking to double down on and continue to invest in. Then they had some assets that they were looking to move on, but they needed a transition period for. This is a premier location in the northern Boston market, right off of I-93, and that I-93, I-95 corridor. Strong industrial area. We’ve underwritten this, as you heard from Ryan, to 440,000 sq ft of industrial build. It’s probably 4 buildings, somewhere in the, give or take, 100,000 sq ft. You’re talking shallow bay industrial, which is perfect for that space. Our cost basis is slightly below market.

We feel like if we did need to get out of this, there’s gonna be interest in the site where we’re gonna be able to make some money on the back end, whether we develop it or not. Our intention is to develop this. We think there is a good opportunity for build-to-suit in this area. We’ve already had interest from one tenant for a build-to-suit on site. The way we’ve penciled this out is we’re looking at yields probably on yield to cost in that low to mid 7 cap range. On a stabilized basis, you’re gonna have values in these assets in the mid to high 5 cap range. This potentially is a home run for us, so we’re very excited about it. We also made sure that as we underwrote it, we found good optionality.

To answer your question about appetite for more, if we can find deals like this, we’ve got all sorts of appetite for it because this is the place where our strategy really shows the value of the build-to-suit, focusing on real estate operation and investment and not just doing the commodity net lease trade that we have seen often in other places.

Anthony Paolone, Analyst, J.P. Morgan: Okay. Got it. Thank you.

Operator: Thank you. Our next question comes from Eric Borden with BMO. Eric, please go ahead.

Eric Borden, Analyst, BMO: Hey, good morning. Thanks, everyone. just kind of going back to Project Triboro and around the Borough Council’s decision to, you know, take 180 days to address the data centers in the ordinance. You know, just curious, you know, what needs to happen there to get that cleared and, you know, you’re able to kind of move forward with data center development. Is there any risks around the Borough Council to kind of push that 180-day review even further out? Thank you.

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah. The 180 days is up to. Our understanding is that the Borough Council wants to move this forward as quickly as possible, although it was prudent for them to take the 180 days. I think it’s important. Interest in land in that particular park besides us. It does not change our timeline. As you heard Ryan say, you know, by the end of 2026, which is what I’ve been saying for a long time, you know, we’re looking to have zoning power and a tenant interest solidified so we can make the right decision to maximize value. You know, sometimes real estate development work can be a little messy, zoning in particular. None of this is out of the ordinary. None of this is a problem.

We’ll work through it over time, and we expect to stay on the timeline that we’ve announced, without any hiccups.

Eric Borden, Analyst, BMO: Great. Thanks. You were active on the ATM this quarter. You know, how should we be thinking about equity issuance for the rest of the year? You know, what conditions would lead you to accelerate or pause the issuance here? Just obviously, share price is a big factor, but just, you know, capital and so on and so forth. Thanks.

John Moragne, Chief Executive Officer, Broadstone Net Lease: Share price is a big factor for sure. I think opportunistic is the right word to use. It is entirely dependent on both share price, which is far more constructive than it was. We’ve been very excited to see the increase in the returns that we’ve been providing on the share price, certainly including the S&P 600 index, which was a wonderful surprise. It’s also opportunistic related to our opportunity set and the pipeline. You know, with the types of deals that we can see, if we find other Charles River type deals or opportunities to deploy capital in a creative manner. As you know, our focus is on direct relationship-based deals like Charles River and some of these others.

You know, put those two things together, there may be more opportunity to do this in the future.

Eric Borden, Analyst, BMO: All right. Thanks for the time. Appreciate it.

Operator: Thank you. Our next question comes from Jay Kornreich with Cantor Fitzgerald. Jay, please go ahead.

Jay Kornreich, Analyst, Cantor Fitzgerald: All right. Thanks very much. I guess first off, just following up on that last question. How do you assess kind of just the opportunity set for regular way acquisitions currently? You know, I guess how is the pipeline? Are you seeing any changes in cap rates? You know, do you see an opportunity to maybe push what’s already embedded in guidance throughout the year? Just, you know, what are your thoughts on that?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah. The certainly seeing increased transaction activity, more portfolio deals, more industrial portfolio deals, so right down the middle of fairway for things that we’re looking at. We’re having an increasing number of conversations with our relationships, so tenants, sponsors, things like that, and finding good opportunities. We’re being really disciplined about where we deploy capital. There wasn’t a ton that we needed this year to hit our guidance range from a growth standpoint. We are allocating a lot towards the build-to-suit program. As everyone knows, that’s where the focus is for us for the long-term, de-risked, attractive value creating growth into the future. There are incremental deals that are out there that are interesting to us.

We’re spending time on them, and just like last year, we’re starting at a place where our guidance and our assumptions around this are relatively conservative in terms of what we think we can do. As the opportunity set starts to form and as we have a better view on what the longer term cost of capital is gonna be for us with the better and more constructive stock price, hopefully, there’s an opportunity for us to do more and potentially push that guidance towards the back half of the year.

Jay Kornreich, Analyst, Cantor Fitzgerald: Okay. Appreciate that. I guess moving to the, you know, to the core part of the company with the industrial build-to-suits. You know, you’ve announced the target of $350 million-$500 million of new deals annually, and also mentioned evaluating a really a robust $1.3 billion of new development opportunities. Can you maybe just comment, you know, what’s driving such an increase in, you know, volume being evaluated? Is it, you know, really just the Broadstone name brand getting stronger in the development space? I guess within that, is it safe to say you feel pretty good about hitting that target in 2026?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah, we feel very good about hitting that target. We’ve got a lot of opportunities we’re evaluating right now. I think it’s a handful of things. One, I gotta give all the credit to the team. Ryan and Will Garner, Sam DeLemos, Ryan Rahaeuser, the folks that are really driving the build-to-suit development process for us are hitting the ground and really making a lot of phone calls, reaching out to their contacts, finding new relationships, really honing in on existing relationships, getting views of entire pipelines of deal flow to see what we’ve out there. Then it’s also that we’re getting some calls. You know, our name is getting out there. People have heard what we’ve been able to do. The referral network is great.

You do a good job for one developer, and you provide a solid outcome, they’re more likely to recommend you to somebody who is in a different geographic area or operates in a different type of retail or industrial space. The team is working really hard to build out this pipeline. You know, we’re also getting a little bit lucky as the name gets out there and the space expands and people are starting to call us as well. All of those things are putting us in a great spot to execute on the strategy and to hit the numbers that we plan.

Jay Kornreich, Analyst, Cantor Fitzgerald: Okay. Thanks for that. I’ll hold it there. Appreciate it.

Operator: Thank you. Our next question comes from Caitlin Burrows with Goldman Sachs. Caitlin, please go ahead.

Caitlin Burrows, Analyst, Goldman Sachs: Hi. Good morning, everyone. Or, yeah, good morning. I guess as we think of incremental build-to-suit announcements and what it means for 2027 completions, I guess could you give some, I don’t know, parameters or range of how many quarters would you say is average for a project to get completed? Obviously, we could look at what you have in the disclosure right now, is it 4? Is it more? I’m just wondering if incremental 26 announcements that are larger than, say, like $5 million or something at this point could open in the first half of 2027, or would it be later in 2027?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah, great question. We usually work on an assumption of, like, the average in the pipeline is about 15 months. Certainly are ones that come inside of that and others that take a little bit more. We’ll call it 12 to 18, generally speaking. There’s a handful of things that could come in in the first half of 2027. At this point, a lot of our attention has been sort of filling out the pipeline on that second half of 27. We’re having that consistent rent commencement from the build-to-suit pipeline over time. There’s a handful of things that are near completion right now that should add to that, and then the stuff that’s a little bit higher up in the pipeline would likely be more into that second half of 27.

Caitlin Burrows, Analyst, Goldman Sachs: Got it. Okay. Maybe just on the tenant side, last quarter, you guys had brought up the Claire’s location and how you were evaluating to either sell or retenant that, also taking another look at the Red Lobster exposure. Wondering if you have any update on either of those.

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah. Not really. Claire’s, we’re still working through the releasing and the sale process. No, no announcements to make on that front. We still have time to work through it. We still feel good there. On Red Lobster, we haven’t had any material change in sort of the position. You know, we continue to monitor them. We continue to look for opportunities for us to reduce that exposure over time while finding accretive ways to dispose those assets. No material updates on either one.

Caitlin Burrows, Analyst, Goldman Sachs: Thanks.

Operator: Thank you. Our next question comes from Ronald Kamdem with Morgan Stanley. Ronald, please go ahead.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease4: Hey. Good morning. This is Jenny on for Ron. Just a follow-up on the tenant health. The bad debt guide, do you still hold 75 basis point of the year given there’s no loss rent in Q1?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah. No loss rent in Q1, 100% rent collection, which we feel great about. It’s still early. You know, we always have to remind ourselves that it’s still the first half of the year, we’ve always sort of taken the position that we’ll reevaluate our bad debt assumption, at least halfway through the year, so at the end of after Q2. Yeah, we’re still holding it at 75, that’s just our more conservative stance that we have taken historically on. We set at the beginning of the year, we leave it until at least after Q2.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease4: Got it. Just to follow up on the Charles River Laboratories laboratory, how should we think about the tenant health there given, you know, the lab has challenging demand environment? Seems like they have a impairment recognized in Q4. Just, yeah, maybe talk a little bit more how you got comfortable with this type of tenant and on the credit side, how do you feel about it?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah, I mean, we feel pretty good there. I mean, we do internal risk ratings, of course. If you wanna look at their agency rating, S&P’s got them at BB+, Moody’s B, Ba1. They’ve got $4 billion+ of revenue. They’re at 2.8x on a leverage basis, they got fixed charge coverage in 3.5x. We feel very good. The longer term piece here, obviously, the short term piece is the majority of the rents in the near term, the $4 million over the course of the next year. The other piece of this is fairly small given the overall size of Charles River. It’s a million and a half a year on a 12-year lease. We feel very comfortable with the credit relative to our exposure.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease4: Got it. Thank you.

Operator: Thank you. Our next question comes from Michael Goldsmith with UBS. Michael, please go ahead.

Michael Goldsmith, Analyst, UBS: Morning. Thanks a lot for taking my question. As you think about the dispositions in 2026, I think you did 1 in the quarter, you got 3 subsequent to the quarter. What characteristics most often trigger a sale here? Is it asset age? Is it tenant credit? Is it cap rate arbitrage or just kind of strategic non-core exposure?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah, I think it comes on both sides of the barbell for us. There’s the risk mitigation type sales, which hit a number of things you talked about in terms of whether it’s tenant exposure, real estate fundamentals, underlying credit. Maybe there was a change of control that we didn’t particularly love. All sorts of stuff that could put something non-core, as you mentioned, into the bucket of, you know, one side of the barbell that we’re just looking to reduce that exposure over time. As Ryan highlighted in his comments, we’re also very happy to do some cap rate arbitrage, and if there’s an opportunistic sale that we can have, then we’re more than willing to do it.

You know, we’ve got a couple of the deals that we’ve done this year that were the result of unsolicited offers to sell at fantastic cap rates. Part of our job is to make sure that we’re creatively recycling our real estate. When we can do that and we can put that back to work in a fashion that’s gonna help us grow our earnings, we’re very pleased to do it.

Michael Goldsmith, Analyst, UBS: Got it. Thanks so much for that. You know, you had that exposure to American Signature and that’s been streamlined with Gardner-White taking over those boxes. Just can you talk a little bit about how much exposure you have to the home furnishing space? How comfortable you’re level with this exposure? Are there plans to reduce this exposure over time? Thanks.

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah, I mean, so we don’t have a huge exposure. I wanna say it’s in like the 2-ish percent range, maybe mid-2s. just a couple of handful of tenants in there. We certainly would be open to reducing that exposure over time. I mean, if you look at consumer data over the last 2 quarters, home furnishings has been roughly flat in terms of sale and foot traffic. it’s not exactly growing, but it’s not shrinking in the same way that it was for a period of time once the sort of post-COVID boom fell off, and they all started to experience a little bit of difficulties. We’re very pleased with the resolution for American Signature with Gardner-White.

We think they’ve got a great team in place and a great business model that they’re gonna be pushing through with our stores in addition to a handful of additional stores that they got from the American Signature bankruptcy. We feel like we’re in a great spot with that new master lease and 10-year term, but doesn’t mean that we wouldn’t look to reduce that over time, depending on where we see demographic trends and sales trends and things going.

Michael Goldsmith, Analyst, UBS: Thank you very much. Good luck in the second quarter.

Operator: Thank you. The next question comes from Upal Rana with KeyBanc Capital Markets. Please go ahead.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease2: Great. Thank you. Kevin, on equity issuances, you know, you sold $3.7 million during the quarter. I know this topic comes up often, but just, you know, any updated thoughts there or likelihood issue more or not would be helpful. Thank you.

Kevin Fennell, Chief Financial Officer, Broadstone Net Lease: Yeah, sure. I think John addressed it for the most part, a little bit ago, but it’s all relative to the opportunity set. We are certainly working with a better cost of capital in the equity slice today versus the last 3 years, frankly. It’s opened up the door on the margin, but we’re still, you know, not looking to pour on in a big way. We get a question very often is an expansion of this, which is, you know, should we be expecting some type of balance sheet equitization enlarge overnight? The answer is still no. Measured opportunistic is still the thing.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease2: Okay, great. That was helpful. You know, maybe, could you give us an update on the total addressable market for the build-to-suit side? You know, it just seems, you know, demand for development has increased broadly recently. Just wondering how that pool has changed or competition or any comments on pricing would be helpful.

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah, I mean, the total addressable market for us is continuing to increase. You know, obviously there’s sort of the nationwide market. We’re thinking more in terms of what we are seeing and what we have an opportunity for, and that’s been growing quarter-over-quarter since we initiated the program. There is increased development activity. I think people are continuing to look for opportunities to bring onshore, near shore to, you know, increase the sophistication of their facilities. We’ve seen it with some of the work that we’ve done as people are getting out of older dated facilities and looking to put in, you know, narrow racking, robotics, all the things that they can do with a build-to-suit that they can’t necessarily do with just walking into a blank slate on a spec.

I think even you saw with today’s GDP numbers that even though the consumer is a little bit more muted than people would like, you know, you are seeing a huge increase in investment on the business side with 10.4% growth on a period-over-period basis. People are looking to put money to work. They’re looking to get into the right types of buildings for their business. They’re looking to make investments into the equipment that’s gonna help them grow their businesses as well. We see a huge amount of opportunity here, and we’re very glad that we got into this space early when we did and have started building the reputation that’s allowed us to execute the way that we have.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease2: Okay, great. That was helpful. Thank you.

Operator: Thank you. The next question comes from Ryan Caviola with Green Street Advisors. Ryan, please go ahead.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease1: Thank you, good morning, everyone. In this new world of AI, how do you view your portfolio’s durability against any secular changes caused by technological advancements? Does that do you differ between the retail side of the portfolio, the industrial side, and maybe even that small office side that’s still in the portfolio? Thanks.

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah, if there’s anything maybe on the office side because of the utilization, if people are gonna be reducing headcount or looking at different arrangements. We think that there’s a lot of resiliency built into our industries and our asset classes in industrial and in the retail and restaurant category. People are still gonna wanna go out to eat, they’re still gonna wanna go out to shop. They’re still gonna be looking for those products to be delivered, for the food to be manufactured, all of the things that our real estate provides and supports. Those industries don’t concern us, you know. Office, I think there’s broader secular trends, and AI is only gonna potentially accelerate those.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease1: Thanks. Appreciate that. Just one quick one on the disposition front. Just seeing if there’s a pricing read-through here on the one asset you sold during the quarter. Just noticed there’s a touch to mid-fives cap rate with a sub-10 lease term, which is kind of interesting. Just any color there. Thanks.

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah. Great opportunistic sale for us. That was an unsolicited offer to sell. You know, we will always look for places where we’ve got an asset valued in one place and somebody else thinks it’s inside or the cap rate is inside of that, so they’re willing to pay more for it, and if we can make that arbitrage work, we will. You know, we’re not looking at going around selling our best trophy assets. You know, these are places where we’ve seen good opportunities for assets that we are kind of put in the middle of the pack for us, but somebody else sees it as a gem. If that’s the case, we’re happy to sell it to them at a mid-five cap.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease1: Got it. Thank you.

Operator: Thank you. The next question comes from John Kim with BMO Capital Markets. John, please go ahead.

John Kim, Analyst, BMO Capital Markets: Thank you. This quarter you had a 119% recapture rate. That follows what you did last quarter of 110%. Is that mainly driven by industrial leasing? Secondly, do you have visibility on what your current mark to market is for your portfolio, just to see how returning this could be going forward?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah, mostly driven by industrial. A lot of times the retail assets that are gonna roll are gonna have a fixed rent bump as the way they go through, but we’ve got a little bit more of ability to mark to market on the industrial side. We aren’t looking necessarily at the assets that have 10 plus years of term left on a mark to market basis. I mean, that’s anyone’s guess at this point, what’s gonna be rent in those periods of time. We do look at it though for the next 2 to 3 to 4 years. You know, we’ve got our re-leasing pretty much under control already for 2026.

We have a little bit of a heftier volume for 2027, but we started working on those last year, and so we have a view on a mark-to-market. Also looking out into 2028 and 2029. Generally speaking, without putting a number on it, we feel very good that on an aggregate basis, we’re in a good spot from a same-store growth standpoint for the assets that are gonna re-lease moving forward.

John Kim, Analyst, BMO Capital Markets: Is it 119%, is that something that could occur again or is this sort of an aberration this quarter?

John Moragne, Chief Executive Officer, Broadstone Net Lease: It depends. I mean, we’ve had good results. I mean, the last couple of years we’ve looked at like 107, 108%. 119’s a little bit higher than what we’ve seen in the last year or so. I’m happy to continue to push for those if we can get it, but that’s maybe a little bit more on the high watermark side.

John Kim, Analyst, BMO Capital Markets: On projects at Project Triboro, a very thorough update, which is helpful. I think at your Investor Day, you talked about hyperscalers’ interest in acquiring that site from you and in its premium. Just given the process could be elongated and maybe it could be end up getting pretty political, is that an option that’s still on the table for you or something that you’re considering?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Yeah. Our conversation with the hyperscalers have primarily been in the zone of leasing, so leasing the sites to them. Powered land sale and us exiting the opportunity still is on the table. You know, there continues to be interest from all sorts of institutional buyers that would like to get access to it. The hyperscale conversation has been much more in the vein of leasing, and to the extent that we believe the right value maximization opportunity for us to sell. There’s plenty of folks that are interested in the site.

John Kim, Analyst, BMO Capital Markets: Okay. Great. Thank you.

Operator: Thank you. The next question comes from Michael Gorman with BTIG. Michael, please go ahead.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease3: Hi, this is Zach Light on from Michael Gorman. Thanks for taking my question. Just building on the first question asked and going back to the Boston transaction in the quarter. You know, it’s a unique deal relative to typical acquisitions in the past. Given the implications in additional infrastructure spend and BTS development component mentioned in the remarks, was this a broadly marketed process or a relationship source transaction? Would this type of parcel structured sale-leaseback with embedded development be something that you’re actively seeking to replicate or more of a opportunistic one-off in the quarter?

John Moragne, Chief Executive Officer, Broadstone Net Lease: Direct deal all the way. This was not broadly marketed. This was one that we partnered with Sansone on to find a solution for them and for Charles River to make this work in an attractive way for us. These are the types of deals that we think that we absolutely excel at because there’s a lot of other folks that would look at something like this and just say no, and they’d walk away because it would involve, you know, a little bit more work and it’s a little bit more outside of, as I said, sort of the commodity net lease business that prevails in a lot of other places. We absolutely would look for more opportunities like this.

We think we’ve built a good reputation on someone who can creatively structure deals that work for everybody, but still provide a great way for us to grow our earnings and find ways to deploy capital to interesting places that can provide value in the future. This isn’t something where, you know, you necessarily can find opportunities like this just on, you know, the listings that are out there from brokers. These are relationship based type deals, and these are the types of deals that we believe are gonna come through our network, and we hope to be able to find more because if this plays out the way that we’ve underwritten and the way that we believe, it’s gonna be a heck of a success for Broadstone.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease3: That’s great. Thanks. Then, just to follow up, switching over to the portfolio, we noticed industrial exposure continues to climb. As industrial concentration approaches, you know, that two-thirds range in the portfolio, how are you thinking about the appropriate ceiling for industrial exposure? Does the mix shift within industrial reflect the specific strategy or is this simply the composition of available deal flow?

John Moragne, Chief Executive Officer, Broadstone Net Lease: I’ll take the second part first. I think it’s a little bit more about deal flow and some of the relationships that we have. Often, you know, our partners will specialize in one particular type of thing versus another, so you’re just gonna naturally see more of a particular industrial type than something else if you’re working with the same developer or the same sponsor or seller, what have you. We saw that with food processing as we grew that over the last few years. We were working with sponsors that did a lot of work in food processing, it naturally became a bigger percentage. In terms of the mix, we have been 70% plus allocated toward from an investment dollar standpoint in industrial since like 2018, 2019.

Not really any difference in the overall strategy, the way that we’re allocating capital and deploying it. I would expect over time that you should see our industrial exposure grow into that 65%-75% as we work our way down on office and the remaining buckets of clinical healthcare and things. You should also expect that, you know, retails and restaurants end up in that, like, 25%, 35%. That would be the mix that I would expect, you know, in the near to medium term for Broadstone going forward.

Brent Maedl, Director of Corporate Finance and Investor Relations, Broadstone Net Lease3: Okay, great. Thanks for the time.

Operator: Thank you. We have no further questions, I’ll turn the call back over to John Moragne for closing remarks.

John Moragne, Chief Executive Officer, Broadstone Net Lease: Great. Thanks everybody for the time today. We’ve enjoyed walking you through our strategy and what we’ve been working on. We’re getting right into the heat of conference season starting next week and all the way through, NAREIT at the beginning of June. We look forward to seeing many of you in person. Hope you all have a great rest of your day. Thank you.

Operator: Thank you everyone for joining us today. This concludes our call, and you may now disconnect your line.