Broadstone Net Lease, Inc. Q1 FY2026 earnings call

Key Developments - Advanced Build the Suite platform with over $90 million in new development projects year-to-date, including a sub-same-day distribution center for Amazon in Sarasota, FL, a retail development for Academy Sports in Magnolia, TX, and a pre-sort battery recycling facility for Tesla near the Gigafactory in Austin, TX. These three build-to-suit investments have a first-year initial cash cap rate of 7.2%, straight-line yields of 8.3%, weighted average lease term of 14 years. - Invested $61.2 million in a 60-acre campus north of Boston tenanted by Charles River Laboratories, with a long-term 12-year net lease and a short-term one-year net lease, providing flexibility for redevelopment. - Project Triborough's work streams on zoning, power, and tenant identification continue to advance. Site work is in progress, power infrastructure coordination is ongoing, zoning efforts with the borough are continuing, and active leasing discussions with hyperscale users are taking place. - Inclusion in the S&P 600 index provides incremental support for cost of equity capital and expands investor base. Raised $71 million of equity under ATM during the quarter. ### Operational Highlights - Strong same store performance with 2.8% year-over-year growth. - Addressed half of 2026 lease maturities with 119% recapture rate. - Dispositions included a $12 million disposition during the quarter and $54.8 million subsequent to quarter end, with disciplined approach to pricing. - Watch list activity was uneventful reflecting portfolio strength and proactive asset management.

In the first quarter of 2026, Broadstone Net Leases delivered 5.6% AFFO growth year-over-year. They 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. The $61.2 million investment in a 60-acre campus north of Boston tenanted by Charles River Laboratories generated approximately $5.5 million of first-year cash rent with a blended initial cash cap rate of 9%. Same store performance had 2.8% year-over-year growth driven by contractual rent increases and successful releasing activity. 119% recapture rate for 2026 lease maturities with half of 22 leases scheduled to expire in 2026 addressed

Guidance - Maintained 2026 per share guidance range of $1.53 to $1.57 with no changes to key assumptions. - Maintained full year assumption of 75 basis points of lost rent within 2026 guidance and plan to revisit throughout the year. - Equity issuances to remain measured and opportunistic as evaluate cost of capital alongside investment opportunities. - Build-a-suit pipeline has 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.

Risks - Forward-looking statements are subject to risk and uncertainties that can cause actual results to differ materially due to a variety of factors. - Zoning process for Project Triborough could face delays or complications. - Macroeconomic uncertainty and market-moving headlines could impact the execution of strategies. - Tenant health and potential bad debt risks, although first quarter had no bad debt, still need to monitor and reevaluate assumptions. - Disposition pricing and market conditions could affect capital recycling and earnings growth.

Question and Answer - Q: On Project Triborough, responsibility for universal site work and capital commitment?

A: TAB, Mark McIntyre said majority of cost pushed off, total for year likely less than $15 million. - Q: On Boston acquisition, conviction level and appetite for land risk?

A: John said it's a creative structured deal, intent to develop, underwritten for build-to-suit with good optionality and appetite for more similar deals. - Q: On Project Triborough zoning council decision and risk?

A: Ryan said council wants to move forward, 180 days is up to, no impact to 2026 timeline. - Q: On equity issuance for rest of year?

A: Kevin said opportunistic, dependent on share price and opportunity set. - Q: On opportunity set for regular way acquisitions?

A: Ryan said increased transaction activity, being disciplined, allocating much to Build a Suit program but seeing incremental interesting deals. - Q: On build-to-suit project completion timeline?

A: Caitlin was told average in pipeline about 15 months, 12 to 18 generally, some in first half of 2027, more in second half. - Q: On tenant health, bad debt guide?

A: Kevin said no loss rate in Q1, still holding 75 basis point assumption, will reevaluate after Q2. - Q: On Charles River Laboratory tenant health?

A: Kevin said Charles River has good agency ratings, revenue, leverage, and fixed charge coverage, feel good about credit. - Q: On dispositions characteristics triggering sale?

A: Michael said both risk mitigation and cap rate arbitrage, including unsolicited offers. - Q: On equity issuances update?

A: Kevin said measured opportunistic, better cost of capital but not pouring on in big way. - Q: On total addressable market for build-to-suit?

A: Kevin said continuing to increase, driven by increased development activity, business investment, and reputation. - Q: On portfolio durability against secular changes from tech advancements?

A: Brian was told industrial and retail have resiliency, office has broader secular trends impacted by AI. - Q: On Boston transaction marketing and replication?

A: Michael said direct deal, relationship source, actively seeking to replicate such deals. - Q: On industrial exposure ceiling and mix?

A: Michael said driven by deal flow and relationships, expect industrial exposure to grow to 65 - 75% over time with retail and restaurants making up the rest