Broadstone Net Lease, Inc.

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 differ materially due to a variety of factors. We caution you not to place under-reliance on these forward-looking statements and refer you to our SEC filings, including our Form 10-K for the year ended December 31, 2024, in our form 10Q for the quarter ended March 31st, 2025, for a more detailed discussion of the risk factors that may cause such differences. And 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 the date of this call. With that, I'll turn the call over to John.

Thank you, Brent. Good afternoon, everyone. As we announced in our earnings release last night, We have raised our full year 2025 AFFO guidance to $1.48 to $1.50 per share, or 4.2% growth at our midpoint, with a 38 cents of AFFO per share for our second quarter, representing 5.6% growth compared to 2024. We are incredibly proud of another outstanding quarter, underscoring the strength of this portfolio and our differentiated growth strategy. Our team's disciplined execution was instrumental in driving meaningful progress on several key tenant matters and our investment activity. This upward revision reflects not only our confidence in the business, but also our steadfast commitment to delivering long-term sustainable growth and value creation for our shareholders. At this halfway point of the reporting calendar, and as we work to continue increasing our momentum as we enter the second half of the year and head into 2026, I thought this would be an appropriate moment to reflect on the progress we have made as a company since this management team was put in place at the beginning of 2023. The past few years for B&L have been defined by a series of seemingly never-ending questions about our business, our strategy, our portfolio, and this management team, and I believe we have answered every one of them with resounding success. As some of these questions continue to linger and weigh on our share price, I thought it would be useful to walk through them today and address them head on. To start, up until this year, the first question was usually some version of, can B&L successfully reposition its portfolio? The answer is undoubtedly yes. And as we heard from many investors, we did it better than they thought we could. We've reduced our clinical healthcare exposure to 2.4% of our ABR, and we have accomplished that while still growing, not shrinking, AFFO per share. we successfully exited a non-core asset class at solid valuation levels to focus our attention on what we do best and where we see the greatest long-term opportunities for generating shareholder value while reducing our near-term property operating expenses and mitigating lease rollover risk within a pocket of the portfolio with the shortest Walt. We have shown that we know how to manage a strategic repositioning out of an asset class, which is why we have no intention of selling our remaining clinical assets or our office portfolio in a fire sale. We intend to take our time and maximize the value of those assets through disciplined execution, ensuring we continue growing AFFO per share each year. The next question is often then centered on whether we can address tenant credit events in our portfolio. Yes, with more than enough examples to prove the point. Net lease is not a zero loss business. Tenant credit matters are bound to happen from time to time, In reacting to any individual tenant credit event as though it has broader implications on our entire business is short-sighted and belies the strength of this company and the portfolio we have thoughtfully constructed since inception. We have proven time and again that we can manage through any tenant credit situation the market wants to throw at us. Not only is our underwriting sound, but we have a battle-tested team deep with operational expertise who can navigate difficult situations as well as any one. From Art Van to Green Valley to Red Lobster to Zips to Stanislaus, we have shown that we can resolve and learn from credit events in our portfolio while ensuring we still grow AFFO per share. The natural follow-up question for this year, then, is what about at-home and Claire's? It's no secret that the at-home and Claire's situations have been weighing on our valuation this year. Let's take our two current headliners in turn. First, at-home. which represents approximately 95 basis points of our ABR at quarter end and includes two properties, At Home's primary distribution facility outside Dallas, Texas, which accounts for roughly 80% of our at-home exposure, and a retail store outside Raleigh, North Carolina, which accounts for the other 20%. As everyone knows, At Home filed for Chapter 11 bankruptcy in June. We believe we are well positioned here for a handful of reasons. First, Year-to-date, we have received every dollar of rent that is owed to us from at-home. Second, our retail site is one of the top-performing at-home locations in the country and also sits in a high-performing community shopping center. Third, we believe our distribution facility is critical to at-home's operations as it services the majority of at-home's retail footprint, and we estimate we are roughly 25% to 35% below market rent. With all indications pointing to at-home recapitalizing its debt structure, streamlining some operations, and emerging from bankruptcy this year, we do not have any current material concerns about at-home's impact on our business. It's too early to know for certain what the final resolution of at-home's bankruptcy will be, but we are confident in our position and will be certain to keep investors apprised of our progress. Second, Claire's, which represents approximately 80 basis points of our ABR and quarter end. We own a single Claire's asset that serves as the company's primary distribution facility in the United States, which is located outside Chicago in Hoffman Estates, with the asset also serving as its corporate headquarters. Based on a handful of recent reports and rumors, Claire's is supposedly considering Chapter 11 bankruptcy, as well as some strategic asset sales, potentially of its foreign operations. As with at home, context here is important. First, year to date, we have received every dollar of rent that is owed to us by Claire's. Importantly, Claire's pays rent on a quarterly basis, so we have already received all of the rent owed to us by Claire's through the end of the third quarter. Second, as Claire's' primary domestic distribution facility and corporate headquarters, we believe our asset is strategically important and will remain so. If, however, Claire's ultimately did vacate, we estimate that our rent is currently roughly 15 to 25% below market. Our asset is in a strong industrial market with access to heavy power, excellent access to I-90, and has already had interest from neighboring businesses looking to expand. As with each tenant credit matter we have faced in recent years, we are well positioned to deal with Claire's either as a continuing tenant in the portfolio or as a workout situation if that should come to pass. Taking all of this into account, We will work through the at-home and Claire's situations as we have any other portfolio matter, and I am confident that we will deliver attractive AFFO per share growth this year and next, despite the noise surrounding these two discrete tenant credit events. In fact, as you will hear from Kevin during his remarks, given our progress so far this year on tenant matters, we have reduced the bad debt reserve in our guidance for the remainder of the year to 75 basis points, as we have only incurred 45 basis points year to date. So, with the existing portfolio questions addressed, the questions then have turned to our differentiated growth strategy. First, a common question has been, will you be able to grow your Build the Suit program in a meaningful way, or was the UNFI deal a one-off? Our Build the Suit program provides us with long-term, high-quality, de-risked, and value-creating growth that provides insight into our portfolio's embedded AFFO growth profile, not only in the current year, but for several years into the future. I'm quite proud of our committed build to suit pipeline and believe it stands on its own in answer to this question. We currently have eight projects comprising more than 370 million of build to suit investments that will generate 28 million of new incremental ABR through the third quarter of 2026, representing growth of 6.9% off our current ABR. And we are hard at work on a robust and resilient pipeline of additional build to suit developments that we look forward to announcing in the coming months. which will provide added visibility into this powerful, compelling, and differentiated investment strategy and our ABR growth into 2027. Continuing in the growth strategy vein, the next question we get asks what role regular way acquisitions will play in our future, with some investors wondering whether we'll eventually stop pursuing them. Sourcing attractive, current yielding acquisitions is one of our core building blocks and an integral part of our operating model. We continue to source and evaluate a high volume of traditional net lease deals and are focused on sourcing relationship-based investment opportunities where we are not required to rely on heavily marketed deals in an ever more competitive acquisitions environment. As you'll hear from Ryan in a bit, we've already closed on approximately 135 million in new property acquisitions this year and have another 234.6 million in acquisitions under control. The number of regular way acquisitions we close in any given year will vary, but being able to grow earnings accretively through a traditional investment while helping our tenants and partners grow their businesses is core to who we are, and that's not going to change. But even with a successful growth strategy, that begs the question, how will you fund your investment activity without a supportive equity cost of capital? It's been almost three years since our last significant equity raise. Although we have a small amount of capital available from some forward ATM activity last summer, We have managed our growth these last few years without reliance on the public equity markets and will continue to do so if need be for the future. In 2023, we executed on approximately $200 million of risk-mitigating sales at a 6% cap rate to fund our growth. In 2024, we had $346 million in sales, almost entirely of clinical healthcare assets, that we recycled into industrial, retail, and build-to-suit investments core to our strategy. And now we have a growing pipeline of high-quality build-to-suit assets that we believe will trade 100 basis points or better on a stabilized basis from the mid-7% development yields we are achieving today, creating significant value and optionality for us to continue funding our growth into the future. We would love to be back in the equity capital markets, but we won't do so until our stock price is at a level where those funds are as constructive for our planned growth as the funding that we can create for ourselves. While we could supercharge AFFO per share growth with a constructive cost of equity capital, which we hope to see in the near term, given all that we have accomplished, we have positioned ourselves to continue to meaningfully grow AFFO per share for our shareholders through other avenues. Underneath many of these questions is an undercurrent about our credibility. Will this management team be able to do what they say they are going to do? Yes, and the evidence is in the answers to all these other questions. We have consistently been transparent, open, and willing to answer any and all questions we've been asked. We've increased our disclosures to provide more and better information to investors to prove out what we say. We've told you what we're going to do. We tell you what we're doing, and then we tell you how we did. We have done what we said we were going to do, and we believe we've done it better than expected. And finally, the most important question of all, can B&L get back to growth? You bet we can. With this quarter's earnings guidance beat and raise, our midpoint now sits at 4.2% AFFO per share growth for the year, which is solidly in the top tier of net lease for 2025. We've been talking about attractive mid-single-digit AFFO per share growth with investors for the future, but we're already delivering that to you today. And with the strength of our in-place portfolio and the visibility we have to 28 million of new additional ABR to come online through the third quarter of 2026, from our committed pipeline of build-to-suit investments, we believe we are well positioned to deliver attractive mid-single-digit AFFO per share growth in 2026, 2027, and beyond. Given where those growth rates place us among our peers based on consensus estimates, I have to believe the growth question has been answered too. We have answered every question that has been asked of us since this management team assumed our roles at the beginning of 2023. We have worked tirelessly over that time to reinvent B&L by designing and implementing a differentiated growth strategy, repositioning our portfolio, reorganizing our internal personnel structures and procedures, reinvigorating and intensifying our investor relations efforts, prudently but aggressively resolving difficult tenant matters, and managing our capital and balance sheet so that we continue to be in a place where we can make decisions we want to, not be forced to make those we have to. We have operated with unshakable confidence that we are creating real value for our shareholders by redefining what's possible as a net lease REIT. And having accomplished all of that, we now expect to see our success properly reflected in our share price and equity multiple. With top-tier growth, a differentiated strategy, a solid in-place portfolio, an ability to create meaningful value, and the capability to fund growth independently of the equity capital markets, we do not believe our current stock price and multiple make any rational sense. I have never been more confident that because we have executed on our strategy the way I knew we would over the last few years, relative equity multiple expansion and a meaningfully higher stock price should be a matter of when and not an if. Since this team was put in place at the beginning of 2023, we have worked incredibly hard to get where we are today. We have executed well and delivered results, and I believe now is B&L's time to shine. Given all that we've accomplished and the success we expect to achieve in the coming years, we thought this would be a great time to host an investor day, to take a deep dive into our differentiated strategy, preliminary guidance for 2026, and a view of our in-place run rate building blocks for 2027. The date will be Tuesday, December 2nd, at the New York Hilton Midtown. More details and a save the date to come in the fall. We are very much looking forward to this event and hope to see many of you there. With that, I'll turn the call over to Ryan.

Thanks, John, and thank you all for joining us today. We had another strong quarter from both an investment activity and same-store portfolio perspective, demonstrating continued disciplined execution and the unique benefits of our differentiated strategy. Beginning with our investment activities so far in 2025, we have invested $262.2 million in new property acquisitions, built-to-suit developments, transitional capital, and revenue-generating CapEx. and have a robust pipeline of both traditional net lease acquisitions and build-to-suit developments underway. Starting with our build-to-suit projects, we have been successfully scaling our build-to-suit pipeline through both existing and new relationships. Since breaking ground on our first build-to-suit with UNFI in the second quarter of 2023, we have commenced 10 projects with six different developers and have an attractive pipeline of additional opportunities that we are working diligently to secure. In addition to the high quality nature of the investment opportunities, build-to-suit developments are one of our core building blocks due to their ability to generate embedded revenue growth in future years long before we close the calendar on the current one. Most net lease REITs provide a forward 90 to 120 day view of their pipeline. Our strategy allows us to provide visibility into a consistent, rolling, constantly refreshing pipeline of projects over a multi-year period. As for what is currently in process today, construction has commenced on eight built-to-suit development projects, totaling an estimated investment of $371.2 million. This pipeline of in-process built-to-suit developments is fully signed up and committed. We now own or control the land. Construction is underway and on time. And as you heard from John, earlier, have locked in approximately $28 million of incremental ABR today that will begin coming online later this year and through the third quarter of 2026, representing approximately 6.9% growth in our current ABR. These committed build-to-suit developments represent long-term, high-quality, de-risked, and value-creating growth that is unique in the net lease space. Last week, we announced the addition of three new build-to-suit projects, adding $61.4 million to our committed pipeline. These projects include a new industrial distribution facility located in Dallas MSA for Palmer Logistics, a new industrial distribution facility located in California's Central Valley for Agco Corporation, and a new grocery store in the Dallas MSA for Sprouts Farmers Market. With these projects, COB, Chris Hagelin, We are excited to add to new development partners to our relationship base and expect all three projects to deliver in the third quarter of 2026. COB, Chris Hagelin, Are in process, build the soup pipeline as a strong weighted average initial yield of 7.5% and a fantastic weighted average straight line yield of 8.9%. COB, Chris Hagelin, Which is driven by weighted average lease term and rent increases of approximately 13 years and 2.9% respectively. And as you have heard us say repeatedly, these projects often come with stronger tenant credit profiles, higher quality and newly constructed buildings, and better overall real estate fundamentals, which provide us a high degree of confidence in the long-term value these assets represent, in addition to the added flexibility they provide. Not only do these developments provide consistent and sustainable earnings growth in the medium term, but they provide flexibility to either hold as traditional long-term net lease investments or monetize at attractive, stabilized valuations once completed. We target a spread between our development yield and stabilized value in excess of 100 basis points, representing an additional layer of value creation, a rarity in the net lease world that we expect to recognize, either in the form of NAV accretion or through positive capital recycling upon a sale of the asset. This past quarter, we also made a $22.3 million investment in the form of transitional capital through a preferred equity investment in a consolidated joint venture that has acquired fully entitled land designated for industrial development with several tenant negotiations underway. The land is located in northeastern Pennsylvania and is part of a larger industrial development opportunity we are currently pursuing and hope to have exciting updates to share later this year. In a competitive and higher interest rate environment where cap rates are under pressure, we believe our build-to-suit strategy provides us a compelling competitive edge. Access to high-quality tenant and developer relationships, superior yield generation, meaningful value creation, and long-term income stability. I'll now turn to our regular way acquisition activity. Through the second quarter, we have closed $113.7 million in new property acquisitions and $2.8 million in revenue generating capex, which together had a weighted average initial cash cap rate, lease term, and annual rent increase of 7.2%, 12.4 years, and 2.8% respectively. And the completed acquisitions had an attractive weighted average straight line yield of 8.3%. After quarter end, we continued our acquisitions momentum with an additional $21.3 million in new properties so far. As we head into the second half of the year, we have $234.6 million in new acquisitions under control and $4.5 million in commitments to fund revenue generating CapEx with existing tenants. Of approximately $370 million in acquisitions we have already closed this year or have under control, more than two thirds have been direct relationship based deals. We've been able to accretively grow our earnings while helping our tenants fuel their growth objectives through strategic sale-leaseback transactions. And while our strategy will generally lean towards industrial investments, we've had success this year from the retail front as well, adding Hobby Lobby to our current tenant roster earlier this year and deepening our relationship with Academy Sports with two new acquisitions this year. Now, shifting to our in-place portfolio, we were 99.1% leased at quarter end with only two of our 766 properties vacant and collected 99.6% of base rents due for the quarter for all properties under lease, representing a 60 basis point increase compared to Q2 2024. As for lease rollovers, we have already addressed most of the leases slated to mature in 2025. We achieved a better than 100% recapture rate on renewing leases and have successful resolutions in motion for the few remaining this year. With only 3% of our ABR rolling in 2026, we have minimal near-term rollover concerns and are actively evaluating and engaging with our tenants on leases scheduled to roll between now and 2028. A proactive approach to managing our lease maturity ladder allows us to mitigate overall rollover risk in any given year, provide clarity and confidence in the growth profile of our same store portfolio in the coming years, and gives us ample time to resolve any known vacancies long before lease maturity and subsequent NOI roll-off. With respect to our watch list, as John said earlier, we have proven time and again that we can manage through any tenant credit situations that may arise. We recently sold both our Stanislaus Surgical and our Room Place assets, resolving both situations and eliminating burdensome vacant carrying costs. Other than our two headline names that John covered earlier, our watch list has remained generally consistent with the home furnishing sector and consumer-centric tenants remaining in focus. We are also paying close attention to some of our remaining clinically-oriented healthcare properties, as well as businesses impacted by tariff or inflationary measures. We remain vigilant in our tenant monitoring efforts and maintain great confidence in our portfolio due to its diversified construction, which limits the impact of any potential individual credit event and our proven ability to manage through any such situation that may arise. With that, I'll turn the call over to Kevin.