Broadstone Net Lease, Inc.

Hello and welcome to Broadstone Net Lease's third quarter 2025 earnings conference call. My name is Elliot and I'll be your operator today. Please note that today's call is being recorded. I'll now turn the call over to Brent Madel, Director of Corporate Finance and Investor Relations at Broadstone. Please go ahead.

Thank you, everyone, for joining us today for Broadstone Net Lease's third quarter 2025 earnings call. On today's call, you will hear prepared remarks from Chief Executive Officer John Marana, President and Chief Operating Officer Ryan Albano, and Chief Financial Officer Kevin Funnell. 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 risk and uncertainties that can cause actual results to differ materially due to a variety of factors. We caution you not to place undue reliance on these forward-looking statements. For 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 31st, 2024, and our Form 10-Q for the quarter ended March 31st, 2025. 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, and good morning, everyone. To start, I would like to thank everyone who joined or listened to our second quarter's earnings call. It was an important one for B&L and my prepared remarks were certainly longer than usual, but there were important messages I felt needed to be conveyed and I appreciate the positive feedback it received. Given our lengthier remarks last time and our upcoming investor day on December 2nd, our prepared remarks for this quarter are intentionally briefer. I'm excited to announce another strong quarter of results that reflects the continued success of our differentiated growth strategy as well as the deep expertise and strategic acumen of our team. We have consistently operated in a way that should answer any questions investors have about this team, our strategy, or our ability to deliver attractive long-term value for our shareholders. We are proud of what we have accomplished so far, but are no less determined to push B&L even higher. This quarter, we invested $204 million in an attractive pipeline of accretive acquisitions and development projects, collected 100% of our rents, resolved both the at-home and Claire's situations with all leases assumed and no bad debt incurred from either, and secured 1.2% sequential quarterly growth in contractual rental obligations, which helped drive a 5.7% increase in quarterly AFFO per share when compared against the third quarter of 2024. As a result of our strong execution, and as you saw in our release last night, we are raising our full-year 2025 guidance to $1.49 to $1.50 of AFFO per share, representing 4.2% to 4.9% growth for the year. On a year-to-date basis, we have invested $552.6 million, including approximately $353.4 million in new property acquisitions, $150.2 million in build-to-sue developments, $40.7 million in transitional capital, and $8.3 million in revenue-generating capital expenditures. we are securing accretive yields in both our regular way acquisitions and in our build-to-suit pipeline. For our new property acquisitions in the third quarter, the weighted average initial cash capitalization rate was 7.1%, and with strong lease terms and top-tier annual rent increases, we are achieving a weighted average straight-line yield on those acquisitions of 8.2%. The estimated returns in our build-to-suit pipeline are even better, standing at 7.5% on an initial cash capitalization rate basis and 8.9% on a straight-line basis. Our Build-A-Suit program continues to mature, providing us with long-term, high-quality, de-risked, value-creating growth that, as you've heard me say repeatedly, provides insight into our portfolio's embedded AFFO growth profile, not only in the current year, but for several years into the future. We have started seven different Build-A-Suit developments so far in 2025, with budgeted deployment of $256.7 million. In addition, we have multiple new projects under executed letters of intent and have invested approximately $41 million in the form of transitional capital yielding 7.8% on the first two phases of an exciting prospective development project you will hear more about from Ryan in a moment, with the third and fourth phases scheduled to close in the next couple of weeks for an additional approximately $44 million. We are also seeing a host of attractive opportunities in our build-a-suit pipeline that gives us lots of confidence heading into the end of the year and the first half of 2026. Taking all that together, we are well on our way to hitting our $500 million goal for 2025, setting us up for continued success in 2026 and beyond. Looking ahead, we believe our industrial-focused strategy and differentiated Build-a-Sue program will provide us with a substantial platform for attractive growth due to several long-term trends and favorable market dynamics. e-commerce remains a steady tailwind with continued investment and distribution and logistics assets geographically focused on major logistics hubs like Dallas-Fort Worth, Atlanta, Chicago, as well as the Northeast, all of which are reflected in our growing pipeline of industrial build suits. On the manufacturing side, reshoring continues to pick up momentum, and we are seeing more opportunities resulting from this trend, both in our investment pipeline as well as our existing portfolio. Reshoring should also have beneficial knock-on effects for us as those investments will drive additional demand for logistics and distribution facilities nearby. We feel good about where we are headed and believe we are well-positioned to take advantage of the value-creating opportunities our strategy provides and this team produces. Turning to the capital markets, this past quarter saw our successful return to the investment-grade bond market as we completed a public offering of $350 million of 5% senior unsecured notes due in 2032. and nearly seven times oversubscribed, this execution and our results provide further validation of the strength of this company and the appeal of this strategy. On the equity front, we continue to evaluate issuing new shares versus accretive capital recycling opportunities to support our growth plans. With the last couple of days aside, with solid price appreciation this year, our shares are trading at more constructive levels, reflecting both improved market sentiment about B&L and growing investor confidence in our long-term strategy. Recent share price appreciation paired with a strong investment pipeline and supportive debt capital markets may facilitate more activity for us in the equity capital markets, likely through tapping into our available ATM capacity. At the same time, we remain focused on maintaining rigorous discipline around our cost of capital to ensure that any new investments or capital raises are accretive to shareholder value. We will continue to evaluate opportunistic dispositions where we can recycle capital from mature or non-core assets into accretive investment opportunities that align with our strategic priorities. Our bill-to-suit assets are an important part of this balanced approach. We can either choose to hold these quality assets as more traditional long-term net lease investments or monetize them at attractive, stabilized valuations once completed. We target a spread between our development yield and stabilized value of more than 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. I believe that balancing proactive equity capital markets activity with prudent capital recycling through opportunistic dispositions will position us well to enhance our portfolio quality, strengthen our balance sheet, and drive sustainable long-term returns for our shareholders. We've come a long way since this management team was put in place. We have delivered total shareholder return of more than 30% since the beginning of 2023, placing us in the top tier of the net lease space over that time. In year to date, we've delivered total shareholder return of nearly 20%. These are incredible returns and reflect a lot of hard work and the value that this team delivers. Despite those returns, however, we still trade below average on an earnings multiple basis. So to put it plainly, we believe there's still a lot of share price valuation upside built into Broadstone Net Lease, and we look forward to capturing that upside. and delivering on the promise of this team, this strategy, and this portfolio in the coming quarters and years. With that, I will turn the call over to Ryan for more information on our investment pipeline, strategy, and in-place portfolio performance.