BNL

• Core Build-to-Suit Platform Progress

  • Subsequent to Q2 end, Broadstone entered a joint venture for a $303 million committed build-to-suit advanced technology facility in Colorado for a Fortune 20 investment-grade tenant, the largest transaction in the company's public history. This deal adds $303 million to the committed build-to-suit pipeline, bringing the total in-process pipeline to $645 million. The facility will have 100MW of committed capacity, a 15-year triple net lease with 2 five-year extension options and 3% annual rent increases. Straight line yield is ~11.6%, with initial cash yields of ~8.5% in year 1 rising to ~9.7% in year 2, with substantial completion expected in March 2027. The joint venture controls land for a second 100MW facility, with the tenant holding a right of first refusal, providing future optional expansion that is not included in current pipeline numbers. The Colorado development will make this tenant Broadstone's largest by annualized base rent (ABR) and is expected to be meaningfully accretive to 2027 and 2028 earnings.
  • Q2 2026 total investment activity was $91.5 million, consisting of $77.3 million in build-to-suit developments and $13.5 million in transitional capital. The full $645 million in-process pipeline has a weighted average estimated initial cash yield of 7.9%, weighted average straight line yield of 9.9%, a 13.7 year weighted average lease term, and 2.7% average annual rent escalations. Approximately $46 million in incremental ABR from committed in-process developments is expected to reach stabilization between Q3 2026 and H1 2027, representing over 10% growth on current in-place portfolio ABR.

• In-Place Portfolio & Redevelopment Activity

  • The portfolio maintained 99.9% occupancy and 99.9% rent collection in Q2 2026, with remaining 2026 lease expirations totaling only 1.9% of ABR.
  • Broadstone began redevelopment of a functionally obsolete Chicago MSA office asset (previously leased to C.H. Robinson) into 156,000 square feet of industrial space, with total estimated investment of $17.9 million. The project is expected to produce stabilized ABR of $2.7 million per year (nearly double the expiring rent) with a targeted rent-commencement stabilization in Q2 2027, and the company is already responding to tenant RFPs for the space. A second redevelopment project was added in early Q3 at the former Claire's asset in Hoffman Estates, Illinois, where the company is evaluating full scrape/rebuild or renovation while continuing to market the property for lease or sale.

• Project Triborough Update

  • Project Triborough is a 550+ acre site in northeastern Pennsylvania with a committed 1 gigawatt power supply. Three distinct value-creating paths forward are under evaluation: near-term land monetization, industrial development, or hyperscale data center campus (viewed as the current highest and best use).
  • Progress in Q2 2026 includes: on schedule earthwork and pad preparation (common to all three development paths, preserving optionality) with the first building pad expected to be ready in Q4 2026; PPL has completed public meetings and selected substation and transmission line routes, with ongoing design work on schedule; zoning progress includes the borough adopting a conditional use zoning amendment for data centers, providing an alternative approval path if needed, while the company continues to assert that data center use is permitted by right under existing zoning; and increased interest from potential hyperscale tenants is being actively pursued. The company expects to decide on a development path by the end of 2026.

• Capital Markets Update

  • Broadstone raised $45.5 million in equity via its at-the-market (ATM) program on a forward basis in Q2 2026 at a weighted average price of $20.77 per share. Subsequent to quarter end, an additional 1.6 million shares were sold forward at $21.45 per share, bringing total unsettled sales to ~$163 million at a weighted average price of $19.97. Approximately $197 million of capacity remains under the ATM program. Subsequent to quarter end, the company secured a new $300 million 12-month delayed draw term loan maturing in 2030 with two 12-month extension options, and cut the margin on existing bank loans by 5 basis points, bringing total available liquidity to ~$1 billion.

• Full-year 2026 adjusted funds from operations (AFFO) per diluted share guidance was raised to a range of $1.55 to $1.57, from the prior range of $1.53 to $1.57, with the new midpoint of $1.56 representing ~5% AFFO per share growth over 2025.
• Full-year 2026 total real estate investment guidance was revised upward to $600 million to $800 million, from the prior range of $500 million to $625 million, an increase of more than $100 million at the midpoint.
• Full-year 2026 disposition guidance was raised to $100 million to $150 million, from the prior range of $75 million to $100 million.
• Full-year 2026 core G&A expense guidance was maintained at $30 million to $31 million.
• The full-year bad debt assumption was lowered to 50 basis points from 75 basis points, reflecting sustained improvement in portfolio performance and a higher-quality tenant base.
• Management expects the size of the annual build-to-suit pipeline to grow incrementally in 2027 and 2028, rather than jumping to a much larger size immediately.

Broadstone Net Lease does not break out public product segment financial performance or revenue contribution percentages in this call. Aggregate portfolio-level results are reported: the portfolio ended Q2 2026 nearly fully occupied, with 765 of 766 properties subject to lease and 99.9% of base rents collected. Same-store total rental revenue grew 2.2% year-over-year, led by 3.3% year-over-year growth across the industrial portfolio. Adjusted Funds From Operations (AFFO) for Q2 2026 was $78.2 million, or $0.39 per diluted share, a 2.6% increase over Q2 2025. Core general and administrative (G&A) expenses for Q2 2026 were $7.3 million, in line with full-year expectations. Year-to-date 2026 dispositions totaled 12 properties sold for $78.3 million in gross proceeds at a weighted average capitalization rate of 6.2% on tenanted properties. Total debt at quarter end was $2.7 billion, with pro forma leverage of 5.9x.

• Forward-looking statements are inherently uncertain, and actual results may differ materially from guidance due to a range of undisclosed or disclosed factors detailed in the company's SEC filings, including Form 10-K for 2025 and quarterly filings.
• Large development projects like the Colorado facility and Project Triborough carry zoning approval risk, delivery timeline risk, and financing risk; large data center/advanced tech developments also require more nuanced financing planning than traditional smaller build-to-suit projects, due to their larger size.
• The regular way acquisition market remains highly competitive with constrained supply, putting downward pressure on available yields relative to the company's build-to-suit pipeline.
• Development pursuit costs may be incurred for opportunities that the company ultimately opts not to complete, as seen in Q2 2026 with a $1.6 million write-off of deposit and legal costs for an abandoned build-to-suit opportunity; these costs may occur periodically as the development platform scales.
• Near-term lease expirations may result in vacancy or additional dispositions if lease extensions are not secured on favorable terms.
• Delays in development delivery beyond contractual cushions would result in delayed rent commencement and temporary rent abatements, though this does not change the long-term lease terms or yield profile.

Q: With the build-to-suit platform now exceeding prior annual volume targets, how does management expect annual deal volume to grow going forward? What is the outlook for large deals like the $303 million Colorado project? / A: Management noted that the Colorado deal is a unique, one-off large opportunity, not the expected new normal for quarterly deal volume. The long-term goal is to incrementally grow annual build-to-suit volume from the prior 350-500 million target as the company grows, rather than making an immediate large jump to 600 million to 1 billion in annual volume. Growth will be gradual in coming years.

Q: Why is the majority of 2026 investment focused on build-to-suit rather than regular-way property acquisitions? What is the strategic priority between the two investment types? / A: This allocation matches the company's plan entering 2026, which shifted to majority build-to-suit after 2025's majority acquisition activity. Build-to-suit opportunities deliver higher yields (7.9% upfront cap rate for the current pipeline), brand new buildings, and stronger investment-grade tenant credit than available in the competitive regular-way market. Management will selectively pursue attractive regular-way opportunities, but new capital will always be prioritized for build-to-suit when given a choice.

Q: What is the expected return threshold for spec redevelopment projects, and will incremental in-house hiring be required as activity grows? / A: For early-stage or speculative non-pre-leased opportunities, management targets levered internal rates of return above 20% and multiples on invested capital around 2x, with a 150 basis point minimum spread between yield on cost and expected stabilized capitalization rates. The company did not note any material near-term increases in in-house headcount costs associated with this activity.

Q: What risk do development delays create for the Colorado project lease economics? / A: The lease includes built-in cushions for delivery timelines. If delays go beyond these cushions, rent will be abated until delivery is complete, which only impacts the timing of rent commencement rather than changing the long-term lease terms or overall yield profile. This structure is not materially different from traditional industrial build-to-suit leases, only with larger absolute monthly rent amounts.