VICTOR, N.Y.--(BUSINESS WIRE)--April 29, 2026--
Broadstone Net Lease, Inc. (NYSE: BNL) ("BNL", the "Company", "we", "our", or "us"), today announced its operating results for the year and quarter ended March 31, 2026.
MANAGEMENT COMMENTARY
"We are off to a great start for the year, delivering 5.6% year-over-year AFFO growth during the quarter," said John Moragne, BNL's Chief Executive Officer. "We strengthened our committed build-to-suit pipeline, invested over $60 million in high yielding stabilized acquisitions, and realized no lost rent, highlighting another quarter of diligent execution across the organization. We remain focused on adding to our growing pipeline of build-to-suits and driving long-term sustainable shareholder value."
FIRST QUARTER 2026 HIGHLIGHTS
OPERATING Generated net income of $46.4 million, or
RESULTS $0.24 per diluted share.
Generated AFFO of $76.9 million, or $0.38
per diluted share, representing a 5.6%
increase compared to the previous year.
Achieved same store rental revenue growth
of 2.8% compared to the previous year,
driven by strong contractual rent
increases and leasing activity in prior
periods.
Incurred $10.3 million of general and
administrative expenses, representing a
7.0% increase compared to the same period
in the prior year. Incurred core general
and administrative expenses of $7.8
million, which excludes $2.5 million of
stock-based compensation, representing a
5.4% increase compared to the same period
in the prior year.
Collected 100.0% of base rents due for the
quarter for all properties under lease.
During the quarter, following the
previously announced assumption by Gardner
White of all six former American Signature
sites, we entered into a new 10-year
master lease covering all six locations.
---------------------------------- ------------------------------------------
INVESTMENT & DISPOSITION ACTIVITY During the first quarter, invested $171.9
million, including $61.2 million in new
property acquisitions, $99.4 million in
build-to-suit developments, including
$21.4 million for two new build-to-suit
developments started during the quarter,
$10.4 million in transitional capital, and
$0.9 million revenue generating capital
expenditures. The completed acquisition
and revenue generating capital
expenditures had a weighted average
initial cash capitalization rate, lease
term, and annual rent increase of 9.0%,
4.1 years, and 0.8%, respectively, and the
completed acquisition had a weighted
average straight-line yield of 9.4%. For
additional information, please reference
the Real Estate Portfolio and Investment
Update section below.
----------------------------------
As of the date of this release, we have a
total of approximately $179.8 million in
remaining estimated investments for
build-to-suit developments to be funded
through the fourth quarter of 2026.
Additionally, we have $5.4 million of
commitments to fund revenue generating
capital expenditures with existing
tenants.
----------------------------------
During the first quarter, we sold one
property for gross proceeds of $12.1
million at a capitalization rate of 5.6%.
Subsequent to quarter-end, we sold three
properties for gross proceeds of $54.8
million.
---------------------------------- ------------------------------------------
CAPITAL MARKETS ACTIVITY During the first quarter of 2026, we sold,
on a forward basis, 3,718,219 shares of
our common stock at a weighted average
gross price per share of $19.13 for
estimated gross proceeds of approximately
$71.1 million under our at-the-market
common equity offering ("ATM Program"),
none of which has settled. These sales may
be settled, at our discretion, at any time
prior to December 2026. After considering
the shares sold subject to forward sale
agreements we have $281.0 million of
capacity remaining under the ATM Program
as of March 31, 2026.
----------------------------------
Declared a quarterly dividend of $0.2925
per share.
---------------------------------- ------------------------------------------
SUMMARIZED FINANCIAL RESULTS
For the Three Months Ended
-----------------------------------------
(in thousands, except per March 31, December 31, March 31,
share data) 2026 2025 2025
------------ -------------- -----------
Revenues $ 121,401 $ 118,295 $ 108,690
Net income, including
non-controlling interests $ 46,392 $ 35,028 $ 17,493
Net earnings per share --
diluted $ 0.24 $ 0.17 $ 0.09
FFO $ 80,697 $ 73,010 $ 72,627
FFO per share $ 0.40 $ 0.37 $ 0.37
Core FFO $ 79,251 $ 77,699 $ 75,280
Core FFO per share $ 0.40 $ 0.39 $ 0.38
AFFO $ 76,850 $ 75,846 $ 71,812
AFFO per share $ 0.38 $ 0.38 $ 0.36
Diluted Weighted Average
Shares Outstanding 199,754 197,935 196,898
FFO, Core FFO, and AFFO are measures that are not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). See the Reconciliation of Non-GAAP Measures later in this press release.
REAL ESTATE PORTFOLIO AND INVESTMENT UPDATE
As of March 31, 2026, we owned a diversified portfolio of 773 individual net leased commercial properties with 766 properties located in 44 U.S. states and seven properties located in four Canadian provinces, comprising approximately 41.9 million rentable square feet of operational space. As of March 31, 2026, all but two of our properties were subject to a lease, and our properties were occupied by 209 different commercial tenants, with no single tenant accounting for more than 3.8% of our annualized base rent ("ABR"). Properties subject to a lease represent 99.8% of our portfolio's rentable square footage. The ABR weighted average lease term and ABR weighted average annual rent increase, pursuant to leases on properties in the portfolio as of March 31, 2026, was 9.5 years and 2.1%, respectively.
During the quarter, we invested $61.2 million in a 60-acre industrial 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 3.0%, and a short-term, 1-year net lease with cash rents of $4.0 million, for a blended 9.0% initial cash cap rate and 4.0 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 build-to-suit development program. Additionally, we reached stabilization on the second of two maintenance, repair and overhaul hangars, commonly referred to as MROs, at Dayton International Airport, supporting Sierra Nevada Corporation's work with the U.S. Air Force at nearby Wright-Patterson Air Force Base. Contractual rent commencement for the
second facility started on April 1, 2026.
Subsequent to quarter end, we commenced one additional build-to-suit development for Tesla, Inc, with an estimated total project investment of $30.4 million. The project includes a presort battery recycling facility that will be located approximately 3 miles from the Gigafactory in Austin, Texas. We expect the project to reach stabilization in the fourth quarter of 2027.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITIES
As of the March 31, 2026, we had total outstanding debt of $2.7 billion, Net Debt of $2.6 billion, a Net Debt to Annualized Adjusted EBITDAre ratio of 6.1x, and a Pro Forma Net Debt to Annualized Adjusted EBITDAre ratio of 5.8x. We had $591.9 million of available capacity on our unsecured revolving credit facility as of quarter end, and no material maturities until 2027.
During the first quarter, we sold on a forward basis, 3,718,219 shares of common stock at a weighted average gross price per share of $19.13 for estimated gross proceeds of approximately 71,115,296 under our ATM Program, none of which has been settled. In total, on a forward basis, we have sold 4,339,706 of shares common stock at a weighted average gross price per share of $19.02 for estimated gross proceeds of $82.5 million. These sales may be settled, at our discretion, at any time prior to December 31, 2026. As of the date of this release, we have approximately $281.0 million of capacity remaining under our $400 million 2024 ATM Program.
DISTRIBUTIONS
At its April 23, 2026 meeting, our board of directors declared a quarterly dividend of $0.2925 per common share and OP Unit to holders of record as of June 30, 2026, payable on or before July 15, 2026.
BUILD-TO-SUIT DEVELOPMENT PROJECTS
The following table summarizes our in-process and stabilized developments as of April 29, 2026.
Projected Target Estimated
Rentable Stabilization Lease Total Estimated Estimated Cash Estimated
Square Start Date/Stabilized Term Annual Rent Project Cumulative Remaining Capitalization Straight-line
Property Feet Date Date (Years) Escalations Investment Investment Investment Rate Yield (1)
---------------- --------- ----- --------------- ------- -------------- ----------- ----------- ----------- ------------------ ------------------
In-process
retail:
----------------
Sprouts Jul.
(Bedford, TX) 22 2025 Aug. 2026 15.0 0.9% $ 9,533 $ 3,589 $ 5,944 7.2% 7.7%
Hobby Lobby Oct.
(Granbury, TX) 55 2025 Sep. 2026 15.0 0.7% 8,129 2,548 5,581 7.1% 7.4%
Academy Sports Oct.
(Granbury, TX) 55 2025 Nov. 2026 15.0 0.6% 12,393 4,988 7,405 7.1% 7.4%
Academy Sports Dec.
(Waco, TX) 68 2025 Sep. 2026 15.0 0.6% 14,487 6,303 8,184 7.2% 7.5%
Academy Sports Feb.
(Magnolia, TX) 55 2026 Nov. 2026 15.0 0.5% 12,975 3,895 9,080 7.3% 7.5%
In-process
industrial:
----------------
Southwire Dec.
(Bremen, GA) 1,178 2024 Nov. 2026 10.0 2.8% 115,411 65,292 50,119 7.8% 8.8%
Fiat Chrysler
Automobile Apr.
(Forsyth, GA) 422 2025 Aug. 2026 15.0 2.8% 78,242 49,492 28,750 6.9% 8.3%
AGCO (Visalia, Jun.
CA) 115 2025 Aug. 2026 12.0 3.5% 19,577 16,637 2,940 7.0% 8.5%
Palmer Logistics
(Midlothian, Jul.
TX) (2) 270 2025 Jul. 2026 12.3 3.5% 32,063 24,915 7,148 7.6% 9.2%
Amazon.com
Services, LLC Feb.
(Sarasota, FL) 230 2026 May. 2027 15.0 2.3% 49,705 18,822 30,883 7.5% 8.8%
Tesla Inc. Apr.
(Austin, TX) 130 2026 Oct. 2027 12.0 3.0% 30,439 7,622 22,817 6.7% 7.9%
2,600 12.9 2.5% 382,954 204,103 178,851 7.3% 8.4%
Stabilized
industrial:
----------------
Sierra Nevada Oct.
(Dayton, OH) 122 2024 Nov. 2025 15.0 3.0% 53,625 53,625 -- 7.5% 9.3%
Sierra Nevada Oct.
(Dayton, OH) 122 2024 Mar. 2026 15.0 3.0% 52,546 51,571 975 7.6% 9.4%
Stabilized
retail:
----------------
7Brew
(Jacksonville, Jun.
FL) 1 2025 Nov. 2025 15.0 1.9% 2,005 2,005 -- 8.0% 8.8%
Total / weighted
average 2,845 13.4 2.6% $ 491,130 $ 311,304 $ 179,826 7.4% 8.6%
----------------- ========= ========== ========== ==========
(1) 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 estimated annual straight-line rental income computed in accordance with GAAP, divided by the estimated total project investment.
(2) Development represents our common and preferred equity investments in a consolidated joint venture, and excludes amounts attributed to non-controlling
interest holders.
2026 GUIDANCE
For 2026, BNL expects to report AFFO of $1.53 to $1.57 per diluted share, which remains unchanged.
The guidance is based on the following key assumptions:
1. investments in real estate properties between $500 million and $625
million;
2. dispositions of real estate properties between $75 million and $100
million; and
3. total core general and administrative expenses between $30 million and
$31 million.
Our per share results are sensitive to both the timing and amount of real estate investments, property dispositions, and capital markets activities that occur throughout the year.
The Company does not provide guidance for the most comparable GAAP financial measure, net income, or a reconciliation of the forward-looking non-GAAP financial measure of AFFO to net income computed in accordance with GAAP, because it is unable to reasonably predict, without unreasonable efforts, certain items that would be contained in the GAAP measure, including items that are not indicative of the Company's ongoing operations, including, without limitation, potential impairments of real estate assets, net gain/loss on dispositions of real estate assets, changes in allowance for credit losses, and stock-based compensation expense. These items are uncertain, depend on various factors, and could have a material impact on the Company's GAAP results for the guidance periods.
CONFERENCE CALL AND WEBCAST
The Company will host its earnings conference call and audio webcast on Thursday, April 30, 2026, at 11:00 a.m. Eastern Time.
To access the live webcast, which will be available in listen-only mode, please visit: https://events.q4inc.com/attendee/613304153. If you prefer to listen via phone, U.S. participants may dial: 1-404-975-4839 (toll free) or 1-646-844-6383 (local), access code 797103. International access numbers are viewable here: https://www.netroadshow.com/conferencing/global-numbers?confId=97882.
A replay of the conference call webcast will be available approximately one hour after the conclusion of the live broadcast. To listen to a replay of the call via the web, which will be available for one year, please visit: https://investors.bnl.broadstone.com.
About Broadstone Net Lease, Inc.
BNL is an industrial-focused, diversified net lease 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. Utilizing an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting, as of March 31, 2026, BNL's diversified portfolio consisted of 773 individual net leased commercial properties with 766 properties located in 44 U.S. states and seven properties located in four Canadian provinces across the industrial, retail, and other property types.
Forward-Looking Statements
This press release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies, and prospects, both business and financial. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "outlook," "potential," "may," "will," "should," "could," "seeks," "approximately," "projects," "predicts," "expect," "intends," "anticipates," "estimates," "plans," "would be," "believes," "continues, " or the negative version of these words or other comparable words. Forward-looking statements, including our 2026 guidance and assumptions, rent commencement timing, and build-to-suit developments, involve known and unknown risks and uncertainties, which may cause BNL's actual future results to differ materially from expected results, including, without limitation, risks and uncertainties related to general economic conditions, including but not limited to increases in the rate of inflation and/or fluctuation of interest rates, local real estate conditions, tenant financial health, property investments and acquisitions, and the timing and uncertainty of completing these property investments and acquisitions, and uncertainties regarding future distributions to our stockholders. These and other risks, assumptions, and uncertainties are described in Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 19, 2026 which you are encouraged to read, and is available on the SEC's website at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. The Company assumes no obligation to, and does not currently intend to, update any forward-looking statements after the date of this press release, whether as a result of new information, future events, changes in assumptions, or otherwise.
Notice Regarding Non-GAAP Financial Measures
In addition to our reported results and net earnings per diluted share, which are financial measures presented in accordance with GAAP, this press release contains and may refer to certain non-GAAP financial measures, including Funds from Operations ("FFO"), Core Funds From Operations ("Core FFO"), AFFO, Net Debt, and Net Debt to Annualized Adjusted EBITDAre. We believe the use of FFO, Core FFO, and AFFO are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO, Core FFO, and AFFO should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure, and should be considered in addition to, and not in lieu of, GAAP financial measures. We believe presenting Net Debt to Annualized Adjusted EBITDAre is useful to investors because it provides information about gross debt less cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using Annualized Adjusted EBITDAre. You should not consider our Annualized Adjusted EBITDAre as an alternative to net income or cash flows from operating activities determined in accordance with GAAP. A reconciliation of non-GAAP measures to the most directly comparable GAAP financial measure and statements of why management believes these measures are useful to investors are included below.
Broadstone Net Lease, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
March 31, 2026 December 31, 2025
---------------- ---------------------
Assets
Accounted for using the
operating method:
Land $ 822,795 $ 781,117
Land improvements 381,795 373,405
Buildings and improvements 4,173,302 4,118,578
Equipment 15,324 15,281
----------- --------------
Total accounted for using the
operating method 5,393,216 5,288,381
Less accumulated depreciation (803,658) (772,589)
----------- --------------
Accounted for using the
operating method, net 4,589,558 4,515,792
Accounted for using the direct
financing method 25,303 25,497
Accounted for using the
sales-type method 14,393 14,405
Property under development 329,260 265,812
----------- --------------
Investment in rental property,
net 4,958,514 4,821,506
Cash and cash equivalents 20,310 30,540
Accrued rental income 184,668 178,880
Tenant and other receivables,
net 3,633 4,404
Prepaid expenses and other
assets 56,183 55,910
Interest rate swap, assets 19,975 18,248
Goodwill 339,769 339,769
Intangible lease assets, net 261,975 268,010
----------- --------------
Total assets $ 5,845,027 $ 5,717,267
=========== ==============
Liabilities and equity
Unsecured revolving credit
facility $ 397,640 $ 266,036
Mortgages, net 56,197 56,689
Unsecured term loans, net 994,820 994,219
Senior unsecured notes, net 1,191,143 1,190,738
Interest rate swap, liabilities 637 1,501
Accounts payable and other
liabilities 61,738 60,081
Dividends payable 59,884 59,513
Accrued interest payable 21,759 13,502
Intangible lease liabilities,
net 39,860 41,527
----------- --------------
Total
liabilities 2,823,678 2,683,806
----------- --------------
Commitments and contingencies
(Note 16)
Equity
Broadstone Net Lease, Inc.
equity:
Preferred stock, $0.001 par
value; 20,000 shares authorized,
no shares issued or outstanding -- --
Common stock, $0.00025 par
value; 500,000 shares
authorized, 191,771 and 191,423
shares issued and outstanding
at March 31, 2026 and December
31, 2025, respectively 48 48
Additional paid-in capital 3,502,465 3,502,380
Cumulative distributions in
excess of retained earnings (630,951) (620,221)
Accumulated other comprehensive
income 20,898 19,788
----------- --------------
Total Broadstone
Net Lease, Inc.
equity 2,892,460 2,901,995
Non-controlling
interests 128,889 131,466
----------- --------------
Total equity 3,021,349 3,033,461
----------- --------------
Total
liabilities
and equity $ 5,845,027 $ 5,717,267
=========== ==============
Broadstone Net Lease, Inc. and Subsidiaries Condensed Consolidated
Statements of Income and Comprehensive (Loss) Income (in
thousands, except per share amounts)
For the Three Months Ended
--------------------------------------
March 31, December 31, March 31,
2026 2025 2025
--------- -------------- -----------
Revenues
Lease revenues, net $121,401 $ 118,295 $108,690
------- --------- -------
Operating expenses
Depreciation and
amortization 41,526 41,768 39,497
Property and operating
expense 6,180 6,282 5,488
General and
administrative 10,349 9,666 9,672
Provision for impairment
of investment in rental
properties -- 4,668 16,128
------- --------- -------
Total operating
expenses 58,055 62,384 70,785
------- --------- -------
Other income (expenses)
Interest income 49 (14) 99
Interest expense (25,260) (25,051) (20,074)
Gain on sale of real
estate 7,122 8,371 405
Income taxes (311) (392) (355)
Other income (expenses) 1,446 (3,797) (487)
------- --------- -------
Net income 46,392 35,028 17,493
Net income attributable
to non-controlling
interests (27) (1,902) (750)
------- --------- -------
Net income
attributable to
Broadstone Net
Lease, Inc. $ 46,365 $ 33,126 $ 16,743
======= ========= =======
Weighted average number
of common shares
outstanding
Basic 190,435 188,480 187,865
======= ========= =======
Diluted 199,754 197,935 196,898
======= ========= =======
Net earnings per share
attributable to common
stockholders
Basic $ 0.24 $ 0.17 $ 0.09
======= ========= =======
Basic and Diluted $ 0.24 $ 0.17 $ 0.09
======= ========= =======
Comprehensive income
(loss)
Net income $ 46,392 $ 35,028 $ 17,493
Other comprehensive
income (loss)
Change in fair value
of interest rate
swaps 2,591 (849) (19,892)
Realized loss (gain)
on interest rate
swaps 31 -- (6)
------- --------- -------
Comprehensive income
(loss) 49,014 34,179 (2,405)
Comprehensive (income)
loss attributable to
non-controlling
interests (136) (1,867) 103
------- --------- -------
Comprehensive income
(loss) attributable to
Broadstone Net Lease,
Inc. $ 48,878 $ 32,312 $ (2,302)
======= ========= =======
Reconciliation of Non-GAAP Measures
The following is a reconciliation of net income to FFO, Core FFO, and AFFO for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025. Also presented is the weighted average number of shares of our common stock and OP Units used for the diluted per share computation:
For the Three Months Ended
--------------------------------------
(in thousands, except per March 31, December 31, March 31,
share data) 2026 2025 2025
--------- -------------- -----------
Net income $ 46,392 $ 35,028 $ 17,493
Real property
depreciation and
amortization 41,443 41,686 39,411
Gain on sale of real
estate (7,122) (8,371) (405)
Provision for impairment
of investment in rental
properties -- 4,667 16,128
FFO adjustment allocable
to joint venture
noncontrolling
interests $ (16) $ -- $ --
------- --------- -------
FFO $ 80,697 $ 73,010 $ 72,627
------- --------- -------
Net write-offs of accrued
rental income -- 1,103 2,228
Other non-core income
from real estate
transactions -- (211) (63)
Cost of debt
extinguishment -- -- 165
Severance and employee
transition costs -- -- 1
Other (income) expenses
(1) (1,446) 3,797 322
------- --------- -------
Core FFO $ 79,251 $ 77,699 $ 75,280
------- --------- -------
Straight-line rent
adjustment (5,630) (5,140) (5,907)
Adjustment to provision
for credit losses -- -- --
Amortization of debt
issuance costs 1,627 1,566 1,237
Non-capitalized
transaction costs 6 157 117
Realized gain or loss on
interest rate swaps and
other non-cash interest
expense 45 14 2
Amortization of lease
intangibles (1,015) (1,017) (1,064)
Stock-based compensation 2,566 2,492 2,147
Deferred taxes $ -- $ 75 $ --
------- --------- -------
AFFO $ 76,850 $ 75,846 $ 71,812
======= ========= =======
Diluted weighted average
shares outstanding (2) 199,754 197,935 196,898
Net earnings per diluted
share (3) $ 0.24 $ 0.17 $ 0.09
FFO per diluted share (3) 0.40 0.37 0.37
Core FFO per diluted
share (3) 0.40 0.39 0.38
AFFO per diluted share
(3) 0.38 0.38 0.36
1 Amount includes $1.4 million, ($1.3) million, and ($0.3) million of
unrealized foreign exchange gain (loss) for the three months ended March
31, 2026, December 31, 2025 and March 31, 2025, respectively, primarily
associated with our Canadian dollar denominated revolving borrowings.
Amount includes a $2.5 million write-off of a non-real estate note
receivable during the year ended December, 31, 2025.
2 Excludes 1,084,415, 1,070,383 and 1,016,888 weighted average shares of
unvested restricted common stock for the three months ended March 31,
2026, December 31, 2025 and March 31, 2025, respectively.
3 Excludes $0.3 million from the numerator for the three months ended March
31, 2026, December 31, 2025 and March 31, 2025, respectively.
Our reported results and net earnings per diluted share are presented in accordance with GAAP. We also disclose FFO, Core FFO, and AFFO, each of which are non-GAAP measures. We believe the use of FFO, Core FFO, and AFFO are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO, Core FFO, and AFFO should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.
We compute FFO in accordance with the standards established by the Board of Governors of 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 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, cost of debt extinguishments, lease termination fees and other non-core income from real estate transactions, gain on insurance recoveries, 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 AFFO, by adjusting Core FFO for certain revenues and expenses that are non-cash or unique in nature, including straight-line rents, adjustment to provision for credit losses, amortization of lease intangibles, amortization of debt issuance costs, amortization of net mortgage premiums, non-capitalized transaction costs such as acquisition costs related to deals that failed to transact, (gain) 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.
The following is a reconciliation of net income to EBITDA, EBITDAre, Adjusted EBITDAre, and Pro Forma Adjusted EBITDAre, debt to Net Debt and Pro Forma Net Debt, Net Debt to Annualized Adjusted EBITDAre, and Pro Forma Net Debt to Annualized Adjusted EBITDAre as of and for the three months ended March 31, 2026, December 31, 2025, and March 31, 2025:
For the Three Months Ended
--------------------------------------
March 31, December 31, March 31,
(in thousands) 2026 2025 2025
--------- -------------- -----------
Net income $ 46,392 $ 35,028 $ 17,493
Depreciation and
amortization 41,526 41,768 39,497
Interest expense 25,260 25,051 20,074
Income taxes 311 392 355
------- --------- -------
EBITDA $113,489 $ 102,239 $ 77,419
Provision for impairment
of investment in rental
properties -- 4,667 16,128
Gain on sale of real
estate (7,122) (8,371) (405)
------- --------- -------
EBITDAre $106,367 $ 98,535 $ 93,142
Adjustment for current
quarter investment
activity(1) 2,548 1,821 978
Adjustment for current
quarter disposition
activity(2) (80) (286) (135)
Adjustment to exclude
non-recurring and other
expenses -- 2,515 44
Adjustment to exclude net
write-offs of accrued
rental income -- 1,103 2,228
Adjustment to exclude
realized / unrealized
foreign exchange (gain)
loss (1,446) 1,282 322
Adjustment to exclude
cost of debt
extinguishment 0 -- 166
Adjustment to exclude
other income from real
estate transactions (33) (392) (63)
------- --------- -------
Adjusted EBITDAre $107,356 $ 104,578 $ 96,682
======= ========= =======
Estimated revenues from
developments(3) 3,237 2,867 631
------- --------- -------
Pro Forma Adjusted
EBITDAre $110,593 $ 107,445 $ 97,313
======= ========= =======
Annualized EBITDAre 425,467 394,140 372,568
Annualized Adjusted
EBITDAre 429,425 418,312 386,728
Pro Forma Annualized
Adjusted EBITDAre 442,371 429,780 389,252
1 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.
2 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.
3 Represents estimated contractual revenues based on in-process development
spend to-date.
March 31, December 31, March 31,
(in thousands) 2026 2025 2025
----------- -------------- -------------
Debt
Unsecured revolving
credit facility $ 397,640 $ 266,036 $ 174,122
Unsecured term loans,
net 994,820 994,219 893,505
Senior unsecured
notes, net 1,191,143 1,190,738 846,252
Mortgages, net 56,197 56,689 76,260
Debt issuance costs 14,056 15,072 10,300
--------- --------- ---------
Gross Debt 2,653,856 2,522,754 2,000,439
Cash and cash
equivalents (20,310) (30,540) (9,605)
Restricted cash (1,369) (3,102) (1,428)
--------- --------- ---------
Net Debt $2,632,177 $ 2,489,112 $1,989,406
--------- --------- ---------
Estimated net
proceeds from
forward equity
agreements(1) (80,551) (10,964) (38,124)
--------- --------- ---------
Pro Forma Net Debt $2,551,626 $ 2,478,148 $1,951,282
========= ========= =========
Leverage Ratios:
Net Debt to 6.2x 6.3x 5.3x
Annualized EBITDAre
=========== ============== =============
Net Debt to 6.1x 6.0x 5.1x
Annualized Adjusted
EBITDAre
=========== ============== =============
Pro Forma Net Debt to 5.8x 5.8x 5.0x
Annualized Adjusted
EBITDAre
1 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.
We define Net Debt as gross debt (total reported debt plus debt issuance costs and original issuance discount) less cash and cash equivalents and restricted cash. 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.
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260429830039/en/
CONTACT: Company Contact:
Brent Maedl
Director, Corporate Finance & Investor Relations
brent.maedl@broadstone.com
585.382.8507
(END) Dow Jones Newswires
April 29, 2026 17:03 ET (21:03 GMT)