Broadstone Net Lease, Inc. 10-Q

10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2022 , or ☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 001-39529 BROADSTONE NET LEASE, INC. (Exact name of registrant as specified in its charter) Maryland 26-1516177 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 800 Clinton Square Rochester , New York 14604 (Address of principal executive offices) (Zip Code) ( 585 ) 287-6500 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.00025 par value BNL The New York Stock Exchange Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ There were 169,306,032 shares of the Registrant's Common Stock, $0.00025 par value per share, outstanding as of May 2, 2022. BROADSTONE NET LEASE, INC. TABLE OF CONTENTS Page Part I - FINANCIAL INFORMATION 1 Item 1. Financial Statements 1 Condensed Consolidated Balance Sheets (Unaudited) 1 Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) 2 Condensed Consolidated Statements of Stockholders' Equity (Unaudited) 3 Condensed Consolidated Statements of Cash Flows (Unaudited) 4 Notes to the Condensed Consolidated Financial Statements (Unaudited) 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 20 Cautionary Note Regarding Forward-Looking Statements 20 Explanatory Note and Certain Defined Terms 20 Overview 21 Real Estate Portfolio Information 22 Results of Operations 28 Liquidity and Capital Resources 31 Derivative Instruments and Hedging Activities 34 Contractual Obligations 34 Cash Flows 35 Non-GAAP Measures 35 Critical Accounting Policies 38 Impact of Recent Accounting Pronouncements 38 Item 3. Quantitative and Qualitative Disclosures About Market Risk 38 Item 4. Controls and Procedures 39 Part II - OTHER INFORMATION 40 Item 1. Legal Proceedings 40 Item 1A. Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40 Item 3. Defaults upon Senior Securities 40 Item 4. Mine Safety Disclosures 40 Item 5. Other Information 40 Item 6. Exhibits 41 Part I. FINANCI AL INFORMATION Item 1. Financi al Statements Broadstone Net Lease, Inc. and Subsidiaries Condensed Consolida ted Balance Sheets (Unaudited) (in thousands, except per share amounts) March 31, 2022 December 31, 2021 Assets Accounted for using the operating method: Land $ 709,962 $ 655,374 Land improvements 300,300 295,329 Buildings and improvements 3,381,990 3,242,618 Equipment 10,422 11,870 Total accounted for using the operating method 4,402,674 4,205,191 Less accumulated depreciation ( 454,122 ) ( 430,141 ) Accounted for using the operating method, net 3,948,552 3,775,050 Accounted for using the direct financing method 28,684 28,782 Accounted for using the sales-type method 571 571 Investment in rental property, net 3,977,807 3,804,403 Cash and cash equivalents 54,103 21,669 Accrued rental income 120,117 116,874 Tenant and other receivables, net 1,160 1,310 Prepaid expenses and other assets 22,525 17,275 Interest rate swap, assets 8,944 &#x2014; Goodwill 339,769 339,769 Intangible lease assets, net 311,277 303,642 Debt issuance costs &#x2013; unsecured revolving credit facility, net 7,427 4,065 Leasing fees, net 9,391 9,641 Total assets $ 4,852,520 $ 4,618,648 Liabilities and equity Unsecured revolving credit facility $ 266,118 $ 102,000 Mortgages, net 96,141 96,846 Unsecured term loans, net 586,884 646,671 Senior unsecured notes, net 843,990 843,801 Interest rate swap, liabilities 1,154 27,171 Accounts payable and other liabilities 40,611 38,038 Dividends payable 47,682 45,914 Accrued interest payable 9,845 6,473 Intangible lease liabilities, net 68,775 70,596 Total liabilities 1,961,200 1,877,510 Commitments and contingencies (See Note 15) Equity Broadstone Net Lease, Inc. stockholders' equity: Preferred stock, $ 0.001 par value; 20,000 shares authorized, no shares issued or outstanding &#x2014; &#x2014; Common stock, $ 0.00025 par value; 500,000 shares authorized, 168,750 and 162,383 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively 42 41 Additional paid-in capital 3,056,560 2,924,168 Cumulative distributions in excess of retained earnings ( 336,988 ) ( 318,476 ) Accumulated other comprehensive income (loss) 5,027 ( 28,441 ) Total Broadstone Net Lease, Inc. stockholders&#x2019; equity 2,724,641 2,577,292 Non-controlling interests 166,679 163,846 Total equity 2,891,320 2,741,138 Total liabilities and equity $ 4,852,520 $ 4,618,648 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 Broadstone Net Lease, Inc. and Subsidiaries Condensed Consolidated Statements of In come and Comprehensive Income (Unaudited) (in thousands, except per share amounts) For the Three Months Ended March 31, 2022 2021 Revenues Lease revenues, net $ 93,841 $ 82,698 Operating expenses Depreciation and amortization 34,290 30,713 Property and operating expense 5,044 4,605 General and administrative 8,828 10,633 Provision for impairment of investment in rental properties &#x2014; 2,012 Total operating expenses 48,162 47,963 Other income (expenses) Interest income &#x2014; 5 Interest expense ( 16,896 ) ( 16,108 ) Cost of debt extinguishment &#x2014; ( 126 ) Gain on sale of real estate 1,196 4,733 Income taxes ( 412 ) ( 413 ) Change in fair value of earnout liability &#x2014; 1,124 Other (expenses) income ( 1,126 ) 10 Net income 28,441 23,960 Net income attributable to non-controlling interests ( 1,683 ) ( 1,737 ) Net income attributable to Broadstone Net Lease, Inc. $ 26,758 $ 22,223 Weighted average number of common shares outstanding Basic 163,809 145,338 Diluted 174,288 156,724 Net earnings per share attributable to common stockholders Basic and diluted $ 0.16 $ 0.15 Comprehensive income Net income $ 28,441 $ 23,960 Other comprehensive income Change in fair value of interest rate swaps 34,961 28,680 Realized loss (gain) on interest rate swaps 659 ( 41 ) Comprehensive income 64,061 52,599 Comprehensive income attributable to non-controlling interests ( 3,790 ) ( 3,813 ) Comprehensive income attributable to Broadstone Net Lease, Inc. $ 60,271 $ 48,786 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Broadstone Net Lease, Inc. and Subsidiaries Condensed Consolidated Statem ents of Stockholders' Equity (Unaudited) (in thousands, except per share amounts) Common Stock Additional Paid-in Capital Cumulative Distributions in Excess of Retained Earnings Accumulated Other Comprehensive Income (Loss) Non- controlling Interests Total Stockholders' Equity Balance, January 1, 2022 $ 41 $ 2,924,168 $ ( 318,476 ) $ ( 28,441 ) $ 163,846 $ 2,741,138 Net income &#x2014; &#x2014; 26,758 &#x2014; 1,683 28,441 Issuance of 6,427 shares of common stock 1 136,825 &#x2014; &#x2014; &#x2014; 136,826 Offering costs, discounts, and commissions &#x2014; ( 2,218 ) &#x2014; &#x2014; &#x2014; ( 2,218 ) Stock-based compensation, net &#x2014; 929 &#x2014; &#x2014; &#x2014; 929 Retirement of 59 shares of common stock &#x2014; ( 1,301 ) &#x2014; &#x2014; &#x2014; ( 1,301 ) Distributions declared ($ 0.265 per share and OP Unit) &#x2014; &#x2014; ( 45,270 ) &#x2014; ( 2,845 ) ( 48,115 ) Change in fair value of interest rate swap agreements &#x2014; &#x2014; &#x2014; 32,893 2,068 34,961 Realized loss on interest rate swap agreements &#x2014; &#x2014; &#x2014; 620 39 659 Adjustment to non-controlling interests &#x2014; ( 1,843 ) &#x2014; ( 45 ) 1,888 &#x2014; Balance, March 31, 2022 $ 42 $ 3,056,560 $ ( 336,988 ) $ 5,027 $ 166,679 $ 2,891,320 Common Stock Class A Common Stock Additional Paid-in Capital Cumulative Distributions in Excess of Retained Earnings Accumulated Other Comprehensive Loss Non- controlling Interests Total Stockholders' Equity Balance, January 1, 2021 $ 27 $ 9 $ 2,624,997 $ ( 259,673 ) $ ( 66,255 ) $ 179,976 $ 2,479,081 Net income &#x2014; &#x2014; &#x2014; 22,223 &#x2014; 1,737 23,960 Issuance of 211 shares of common stock &#x2014; &#x2014; 233 &#x2014; &#x2014; &#x2014; 233 Offering costs, discounts, and commissions &#x2014; &#x2014; ( 500 ) &#x2014; &#x2014; &#x2014; ( 500 ) Stock-based compensation &#x2014; &#x2014; 1,769 &#x2014; &#x2014; &#x2014; 1,769 Retirement of 45 shares of common stock &#x2014; &#x2014; ( 832 ) &#x2014; &#x2014; &#x2014; ( 832 ) Conversion of 37,000 Class A common stock to 37,000 shares of common stock 9 ( 9 ) &#x2014; &#x2014; &#x2014; &#x2014; &#x2014; Conversion of 38 OP Units to 38 shares of common stock &#x2014; &#x2014; 606 &#x2014; &#x2014; ( 606 ) &#x2014; Distributions declared ($ 0.250 per share and OP Unit) &#x2014; &#x2014; &#x2014; ( 36,690 ) &#x2014; ( 2,963 ) ( 39,653 ) Change in fair value of interest rate swap agreements &#x2014; &#x2014; &#x2014; &#x2014; 26,602 2,078 28,680 Realized gain on interest rate swap agreements &#x2014; &#x2014; &#x2014; &#x2014; ( 39 ) ( 2 ) ( 41 ) Adjustment to non-controlling interests &#x2014; &#x2014; ( 953 ) &#x2014; 1,008 ( 55 ) &#x2014; Balance, March 31, 2021 $ 36 $ &#x2014; $ 2,625,320 $ ( 274,140 ) $ ( 38,684 ) $ 180,165 $ 2,492,697 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Broadstone Net Lease, Inc. and Subsidiaries Condensed Consolidated St atements of Cash Flows (Unaudited) (in thousands) For the Three Months Ended March 31, 2022 2021 Operating activities Net income $ 28,441 $ 23,960 Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities: Depreciation and amortization including intangibles associated with investment in rental property 33,132 29,985 Provision for impairment of investment in rental properties &#x2014; 2,012 Amortization of debt issuance costs and original issuance discount charged to interest expense 830 879 Stock-based compensation expense 929 1,769 Straight-line rent, direct financing and sales-type lease adjustments ( 3,584 ) ( 4,632 ) Cost of debt extinguishment &#x2014; 126 Gain on sale of real estate ( 1,196 ) ( 4,733 ) Change in fair value of earnout liability &#x2014; ( 1,124 ) Other non-cash items 2,275 ( 95 ) Changes in assets and liabilities, net of acquisition: Tenant and other receivables 150 582 Prepaid expenses and other assets 804 1,072 Accounts payable and other liabilities ( 6,049 ) ( 3,894 ) Accrued interest payable 3,372 5,873 Net cash provided by operating activities 59,104 51,780 Investing activities Acquisition of rental property accounted for using the operating method ( 211,902 ) ( 88,532 ) Capital expenditures and improvements ( 778 ) ( 1,334 ) Proceeds from disposition of rental property, net 5,020 22,105 Change in deposits on investments in rental property ( 18 ) 100 Net cash used in investing activities ( 207,678 ) ( 67,661 ) Financing activities Proceeds from issuance of common stock, net of $ 2,132 and $ 173 offering costs, discounts, and commissions in 2022 and 2021, respectively 134,412 ( 173 ) Principal payments on mortgages and unsecured term loans ( 60,700 ) ( 50,802 ) Borrowings on unsecured revolving credit facility 250,783 15,000 Repayments on unsecured revolving credit facility ( 88,000 ) &#x2014; Cash distributions paid to stockholders ( 43,503 ) ( 36,402 ) Cash distributions paid to non-controlling interests ( 2,845 ) ( 3,174 ) Debt issuance and extinguishment costs paid ( 3,795 ) ( 946 ) Net cash provided by (used in) financing activities 186,352 ( 76,497 ) Net increase (decrease) in cash and cash equivalents and restricted cash 37,778 ( 92,378 ) Cash and cash equivalents and restricted cash at beginning of period 27,769 110,728 Cash and cash equivalents and restricted cash at end of period $ 65,547 $ 18,350 Reconciliation of cash and cash equivalents and restricted cash Cash and cash equivalents at beginning of period $ 21,669 $ 100,486 Restricted cash at beginning of period 6,100 10,242 Cash and cash equivalents and restricted cash at beginning of period $ 27,769 $ 110,728 Cash and cash equivalents at end of period $ 54,103 $ 10,205 Restricted cash at end of period 11,444 8,145 Cash and cash equivalents and restricted cash at end of period $ 65,547 $ 18,350 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Broadstone Net Lease, Inc. and Subsidiaries Notes to the Condensed Consolid ated Financial Statements (Unaudited) 1. Business Description Broadstone Net Lease, Inc. (the "Corporation") is a Maryland corporation formed on October 18, 2007 , that elected to be taxed as a real estate investment trust ("REIT") commencing with the taxable year ended December 31, 2008. The Corporation focuses on investing in income-producing, net leased commercial properties, primarily in the United States. The Corporation leases industrial, healthcare, restaurant, retail, and office commercial properties under long-term lease agreements. At March 31, 2022 , the Corporation owned a diversified portfolio of 752 individual commercial properties with 745 properties located in 43 U.S. states and seven properties located in four Canadian provinces. Broadstone Net Lease, LLC (the Corporation's operating company, or the "OP"), is the entity through which the Corporation conducts its business and owns (either directly or through subsidiaries) all of the Corporation's properties. The Corporation is the sole managing member of the OP. The membership units not owned by the Corporation are referred to as OP Units or non-controlling interests. As the Corporation conducts substantially all of its operations through the OP, it is structured as what is referred to as an umbrella partnership real estate investment trust ("UPREIT"). The Corporation, the OP, and its consolidated subsidiaries are collectively referred to as the "Company." Pursuant to the Corporation's initial public offering ("IPO"), a new class of common stock ("Class A Common Stock") was issued. On March 20, 2021, each share of Class A Common Stock automatically converted into one share of common stock, and effective March 22, 2021, all shares of common stock were listed and freely tradeable on the NYSE under the symbol "BNL." The following table summarizes the outstanding equity and economic ownership interest of the Corporation and the OP: March 31, 2022 December 31, 2021 (in thousands) Shares of Common Stock OP Units Total Diluted Shares Shares of Common Stock OP Units Total Diluted Shares Ownership interest 168,750 10,323 179,073 162,383 10,323 172,706 Percent ownership of OP 94.2 % 5.8 % 100.0 % 94.0 % 6.0 % 100.0 % Refer to Note 13 for further discussion regarding the calculation of weighted average shares outstanding. 5 2. Summary of Significant Accounting Policies Interim Information The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information (Accounting Standards Codification ("ASC") 270, Interim Reporting ) and Article 10 of the Securities and Exchange Commission's ("SEC") Regulation S-X. Accordingly, the Corporation has omitted certain footnote disclosures which would substantially duplicate those contained within the audited consolidated financial statements for the year ended December 31, 2021, included in the Company's 2021 Annual Report on Form 10-K, filed with the SEC on February 23, 2022. Therefore, the readers of this quarterly report should refer to those audited consolidated financial statements, specifically Note 2, Summary of Significant Accounting Policies , for further discussion of significant accounting policies and estimates. The Corporation believes all adjustments necessary for a fair presentation have been included in these interim Condensed Consolidated Financial Statements (which include only normal recurring adjustments). Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts and operations of the Company. All intercompany balances and transactions have been eliminated in consolidation. To the extent the Corporation has a variable interest in entities that are not evaluated under the variable interest entity ("VIE") model, the Corporation evaluates its interests using the voting interest entity model. The Corporation has complete responsibility for the day-to-day management of, authority to make decisions for, and control of the OP. Based on consolidation guidance, the Corporation has concluded that the OP is a VIE as the members in the OP do not possess kick-out rights or substantive participating rights. Accordingly, the Corporation consolidates its interest in the OP. However, because the Corporation holds the majority voting interest in the OP and certain other conditions are met, it qualifies for the exemption from providing certain disclosure requirements associated with investments in VIEs. The portion of the OP not owned by the Corporation is presented as non-controlling interests as of and during the periods presented. Basis of Accounting The Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. Use of Estimates The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include, but are not limited to, the allocation of purchase price between tangible and intangible assets acquired and liabilities assumed, the value of long-lived assets and goodwill, the provision for impairment, the depreciable lives of rental property, the amortizable lives of intangible assets and liabilities, the provisions for uncollectible rent and credit losses, the fair value of the earnout liability, the fair value of assumed debt, the fair value of the Company's interest rate swap agreements, and the determination of any uncertain tax positions. Accordingly, actual results may differ from those estimates. Long-lived Asset Impairment The Company reviews long-lived assets to be held and used for possible impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If, and when, such events or changes in circumstances are present, an impairment exists to the extent the carrying value of the long-lived asset or asset group exceeds the sum of the undiscounted cash flows expected to result from the use of the long-lived asset or asset group and its eventual disposition. Such cash flows include expected future operating income, as adjusted for trends and prospects, as well as the effects of demand, competition, and other factors. An impairment loss is measured as the amount by which the carrying amount of the long-lived asset or asset group exceeds its fair value. Significant judgment is made to determine if and when impairment should be taken. The Company's assessment of impairment as of March 31, 2022 and 2021 was based on the most current information available to the Company. Certain of the Company's properties may have fair values less than their carrying amounts. However, based on the Company's plans with respect to each of those properties, the Company believes that their carrying amounts are recoverable and therefore, no impairment charges were recognized other than those described below. If the operating conditions mentioned above deteriorate or if the Company's expected holding period for assets changes, subsequent tests for impairments could result in additional impairment charges in the future. 6 Inputs used in establishing fair value for real estate assets generally fall within Level 3 of the fair value hierarchy, which are characterized as requiring significant judgment as little or no current market activity may be available for validation. The main indicator used to establish the classification of the inputs is current market conditions, as derived through the use of published commercial real estate market information. The Company determines the valuation of impaired assets using generally accepted valuation techniques including discounted cash flow analysis, income capitalization, analysis of recent comparable sales transactions, actual sales negotiations, and bona fide purchase offers received from third parties. Management may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. The following table summarizes the Company's impairment charge, resulting primarily from changes in the Company's long-term hold strategy, with respect to the individual property: For the Three Months Ended March 31, (in thousands, except number of properties) 2022 2021 Number of properties &#x2014; 1 Impairment charge $ &#x2014; $ 2,012 Restricted Cash Restricted cash includes escrow funds the Company maintains pursuant to the terms of certain mortgages, lease agreements, and undistributed proceeds from the sale of properties under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), and is reported within Prepaid expenses and other assets on the Condensed Consolidated Balance Sheets. Restricted cash consisted of the following: March 31, December 31, (in thousands) 2022 2021 Escrow funds and other $ 6,410 $ 6,100 Undistributed 1031 proceeds 5,034 &#x2014; $ 11,444 $ 6,100 Rent Received in Advance Rent received in advance represents tenant payments received prior to the contractual due date, and is included in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets. Rent received in advance consisted of the following: (in thousands) March 31, 2022 December 31, 2021 Rent received in advance $ 15,181 $ 15,162 Fair Value Measurements Recurring Fair Value Measurements The balances of financial instruments measured at fair value on a recurring basis are as follows (see Note 9): March 31, 2022 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, assets $ 8,944 $ &#x2014; $ 8,944 $ &#x2014; Interest rate swap, liabilities ( 1,154 ) &#x2014; ( 1,154 ) &#x2014; December 31, 2021 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, liabilities $ ( 27,171 ) $ &#x2014; $ ( 27,171 ) $ &#x2014; 7 Long-term Debt &#x2013; The fair value of the Company's debt was estimated using Level 1, Level 2, and Level 3 inputs based on recent secondary market trades of the Company's 2031 Senior Unsecured Public Notes (see Note 7), recent financing transactions, estimates of the fair value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current London Interbank Offered Rate ("LIBOR"), U.S. Treasury obligation interest rates, and discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect the Company's judgment as to the approximate current lending rates for loans or groups of loans with similar maturities and assumes that the debt is outstanding through maturity. Market information, as available, or present value techniques were utilized to estimate the amounts required to be disclosed. Since such amounts are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or other repayment restrictions that may exist on specific loans, it is unlikely that the estimated fair value of any such debt could be realized by immediate settlement of the obligation. The following table summarizes the carrying amount reported on the Condensed Consolidated Balance Sheets and the Company's estimate of the fair value of the unsecured revolving credit facility, mortgages, unsecured term loans, and senior unsecured notes which reflects the fair value of interest rate swaps: (in thousands) March 31, 2022 December 31, 2021 Carrying amount $ 1,802,552 $ 1,699,160 Fair value 1,785,597 1,785,701 Non-recurring Fair Value Measurements The Company's non-recurring fair value measurements at March 31, 2022 and December 31, 2021 consisted of the fair value of impaired real estate assets that were determined using Level 3 inputs. Stock-Based Compensation The Company has issued restricted stock awards ("RSAs") and performance-based restricted stock units ("PRSUs") under its 2020 Omnibus Equity and Incentive Plan (the "Equity Incentive Plan"). Subject to any adjustment as provided in the Equity Incentive Plan, up to 9,000,000 shares may be issued to awards granted under the Equity Incentive Plan. The Company accounts for stock-based incentives in accordance with ASC 718, Compensation &#x2013; Stock Compensation , which requires that such compensation be recognized in the financial statements based on the award's estimated grant date fair value. The value of such awards is recognized as compensation expense in General and administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income over the appropriate vesting period on a straight-line basis or at the cumulative amount vested at each balance sheet date, if greater. The Company records forfeitures during the period in which they occur by reversing all previously recorded stock compensation expense associated with the forfeited shares. Dividends declared on RSAs issued under the Equity Incentive Plan are recorded as Cumulative distributions in excess of retained earnings on the Condensed Consolidated Balance Sheets. Accumulated dividends related to forfeited RSAs are reversed through compensation expense in the period the forfeiture occurs. Dividends accrued on the PRSUs are recorded as Cumulative distributions in excess of retained earnings on the Condensed Consolidated Balance Sheets. Accumulated dividends accrued related to forfeited PRSUs are reversed in the period the forfeiture occurs. Recently Adopted Accounting Standards In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt &#x2013; Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging &#x2013; Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity . The guidance in ASU 2020-06 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments in ASU 2020-06 also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity's Own Equity , by removing certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments. The amendments in ASU 2020-06 were effective for the Company beginning January 1, 2022. The Company uses the two-class method of computing basic and diluted earnings per share. Based on the nature of the Company's potentially dilutive instruments, the treasury stock method is not used in computing dilutive earnings per share. Accordingly, the adoption of ASU 2020-06 did not have a material impact on the Company. 8 3. Acquisitions of Rental Property The Company closed on the following acquisitions during the three months ended March 31, 2022: (in thousands, except number of properties) Number of Real Estate Date Property Type Properties Acquisition Price January 7, 2022 Retail 2 $ 2,573 February 10, 2022 Industrial 1 21,733 February 15, 2022 Retail 1 1,341 February 28, 2022 Industrial 1 5,678 March 4, 2022 Retail 6 79,061 March 31, 2022 Restaurant 16 99,587 27 $ 209,973 (a) (a) Acquisition price does not include capitalized acquisition costs of $ 2.0 million . The Company closed on the following acquisitions during the three months ended March 31, 2021: (in thousands, except number of properties) Number of Real Estate Date Property Type Properties Acquisition Price February 5, 2021 Healthcare 1 $ 4,843 February 26, 2021 Restaurant (b) 181 March 11, 2021 Retail 13 26,834 March 30, 2021 Retail 11 41,324 March 31, 2021 Healthcare 3 14,140 28 $ 87,322 (c) (b) Acquisition of additional land adjacent to an existing property. (c) Acquisition price does not include capitalized acquisition costs of $ 1.2 million. The Company allocated the purchase price of these properties to the fair value of the assets acquired and liabilities assumed. The following table summarizes the purchase price allocation for completed real estate acquisitions: For the Three Months Ended March 31, (in thousands) 2022 2021 Land $ 54,784 $ 19,584 Land improvements 5,410 4,355 Buildings and improvements 142,269 57,893 Acquired in-place leases (d) 16,037 6,725 Acquired below-market lease (e) ( 76 ) &#x2014; Non-real estate liabilities assumed ( 6,440 ) &#x2014; $ 211,984 $ 88,557 (d) The weighted average amortization period for acquired in-place leases is 19 years and 16 years for acquisitions completed during the three months ended March 31, 2022 and 2021, respectively. (e) The weighted average amortization period for acquired below-market leases is nine years for acquisitions completed during the three months ended March 31, 2022. There were no below-market leases acquired during the three months ended March 31, 2021. The above acquisitions were funded using a combination of available cash on hand, and proceeds from equity issuances and revolving credit facility borrowings. All real estate acquisitions closed during the three months ended March 31, 2022 and 2021, qualified as asset acquisitions and, as such, acquisition costs have been capitalized. Subsequent to March 31, 2022, the Company closed on the following acquisitions (see Note 16): (in thousands, except number of properties) Number of Real Estate Date Property Type Properties Acquisition Price April 12, 2022 Retail 1 $ 1,680 April 12, 2022 Industrial 1 7,522 April 13, 2022 Industrial 1 16,250 April 19, 2022 Retail 1 1,780 4 $ 27,232 9 4. Sale of Real Estate The Company closed on the following sales of real estate, none of which qualified as discontinued operations: For the Three Months Ended March 31, (in thousands, except number of properties) 2022 2021 Number of properties disposed 1 8 Aggregate sale price $ 5,212 $ 23,062 Aggregate carrying value ( 3,824 ) ( 17,372 ) Additional sales expenses ( 192 ) ( 957 ) Gain on sale of real estate $ 1,196 $ 4,733 5. Investment in Rental Property and Lease Arrangements The Company generally leases its investment rental property to established tenants in the industrial, healthcare, restaurant, retail, and office property types. At March 31, 2022 , the Company had 752 real estate properties, 739 of which were leased under leases that have been classified as operating leases , 10 that have been classified as direct financing leases, one that has been classified as a sales-type lease, and two that were vacant. Of the 10 leases classified as direct financing leases , three include land portions which are accounted for as operating leases. The sales-type lease includes a land portion which is accounted for as an operating lease. Most leases have initial terms of 10 to 20 years . The Company's leases generally provide for limited increases in rent as a result of fixed increases, increases in the Consumer Price Index ("CPI"), or increases in the tenant's sales volume. Generally, tenants are also required to pay all property taxes and assessments, substantially maintain the interior and exterior of the building, and maintain property and liability insurance coverage. The leases also typically provide for one or more multiple year renewal options, at the election of the tenant, and are subject to generally the same terms and conditions as the initial lease. Investment in Rental Property &#x2013; Accounted for Using the Operating Method Depreciation expense on investment in rental property was as follows: For the Three Months Ended March 31, (in thousands) 2022 2021 Depreciation $ 26,658 $ 23,743 Estimated lease payments to be received under non-cancelable operating leases with tenants at March 31, 2022 are as follows: (in thousands) Remainder of 2022 $ 260,936 2023 349,824 2024 346,753 2025 340,232 2026 330,637 Thereafter 2,469,426 $ 4,097,808 Since lease renewal periods are exercisable at the option of the tenant, the above amounts only include future lease payments due during the initial lease terms. Such amounts exclude any potential variable rent increases that are based on changes in the CPI or future variable rents which may be received under the leases based on a percentage of the tenant's gross sales. Additionally, certain of our leases provide tenants with the option to terminate their leases in exchange for termination penalties, or that are contingent upon the occurrence of a future event. Future lease payments within the table above have not been adjusted for these termination rights. 10 Investment in Rental Property &#x2013; Direct Financing Leases The Company's net investment in direct financing leases was comprised of the following: (in thousands) March 31, 2022 December 31, 2021 Undiscounted estimated lease payments to be received $ 41,793 $ 42,602 Estimated unguaranteed residual values 15,203 15,203 Unearned revenue ( 28,182 ) ( 28,893 ) Reserve for credit losses ( 130 ) ( 130 ) Net investment in direct financing leases $ 28,684 $ 28,782 Undiscounted estimated lease payments to be received under non-cancelable direct financing leases with tenants at March 31, 2022 are as follows: (in thousands) Remainder of 2022 $ 2,433 2023 3,304 2024 3,361 2025 3,474 2026 3,547 Thereafter 25,674 $ 41,793 The above rental receipts do not include future lease payments for renewal periods, potential variable CPI rent increases, or variable percentage rent payments that may become due in future periods. The following table summarizes amounts reported as Lease revenues, net on the Condensed Consolidated Statements of Income and Comprehensive Income: For the Three Months Ended March 31, (in thousands) 2022 2021 Contractual rental amounts billed for operating leases $ 84,396 $ 73,245 Adjustment to recognize contractual operating lease billings on a straight-line basis 5,021 4,809 Net write-offs of accrued rental income ( 1,326 ) ( 442 ) Variable rental amounts earned 186 91 Earned income from direct financing leases 723 730 Interest income from sales-type leases 14 14 Operating expenses billed to tenants 4,735 4,388 Other income from real estate transactions 42 5 Adjustment to revenue recognized for uncollectible rental amounts billed, net 50 ( 142 ) Total Lease revenues, net $ 93,841 $ 82,698 11 6. Intangible Assets and Liabilities The following is a summary of intangible assets and liabilities and related accumulated amortization: (in thousands) March 31, 2022 December 31, 2021 Lease intangibles: Acquired above-market leases $ 46,990 $ 47,147 Less accumulated amortization ( 17,396 ) ( 16,807 ) Acquired above-market leases, net 29,594 30,340 Acquired in-place leases 395,326 380,766 Less accumulated amortization ( 113,643 ) ( 107,464 ) Acquired in-place leases, net 281,683 273,302 Total intangible lease assets, net $ 311,277 $ 303,642 Acquired below-market leases $ 105,386 $ 105,310 Less accumulated amortization ( 36,611 ) ( 34,714 ) Intangible lease liabilities, net $ 68,775 $ 70,596 Leasing fees $ 14,728 $ 14,786 Less accumulated amortization ( 5,337 ) ( 5,145 ) Leasing fees, net $ 9,391 $ 9,641 Amortization of intangible lease assets and liabilities was as follows: (in thousands) For the Three Months Ended March 31, Intangible Financial Statement Presentation 2022 2021 Acquired in-place leases and leasing fees Depreciation and amortization $ 7,601 $ 6,947 Above-market and below-market leases Lease revenues, net 1,161 753 Estimated future amortization of intangible assets and liabilities at March 31, 2022 is as follows: (in thousands) Remainder of 2022 $ 19,508 2023 25,800 2024 25,040 2025 23,743 2026 22,393 Thereafter 135,409 $ 251,893 12 7. Unsecured Credit Agreements The following table summarizes the Company's unsecured credit agreements: Outstanding Balance (in thousands, except interest rates) March 31, 2022 December 31, 2021 Interest Rate Maturity Date Unsecured revolving credit facility $ 266,118 $ 102,000 Applicable reference rate + 0.85 % (a) (b) (c) Mar. 2026 Unsecured term loans: 2022 Unsecured Term Loan &#x2014; 60,000 one-month LIBOR + 1.00 % (c) Feb. 2022 (d) 2024 Unsecured Term Loan 190,000 190,000 one-month LIBOR + 1.00 % (c) Jun. 2024 2026 Unsecured Term Loan 400,000 400,000 one-month LIBOR + 1.00 % (c) Feb. 2026 Total unsecured term loans 590,000 650,000 Unamortized debt issuance costs, net ( 3,116 ) ( 3,329 ) Total unsecured term loans, net 586,884 646,671 Senior unsecured notes: 2027 Senior Unsecured Notes - Series A 150,000 150,000 4.84 % Apr. 2027 2028 Senior Unsecured Notes - Series B 225,000 225,000 5.09 % Jul. 2028 2030 Senior Unsecured Notes - Series C 100,000 100,000 5.19 % Jul. 2030 2031 Senior Unsecured Public Notes 375,000 375,000 2.60 % Sep. 2031 Total senior unsecured notes 850,000 850,000 Unamortized debt issuance costs and original issuance discount, net ( 6,010 ) ( 6,199 ) Total senior unsecured notes, net 843,990 843,801 Total unsecured debt, net $ 1,696,992 $ 1,592,472 (a) At March 31, 2022, a balance of $ 186.0 million was subject to the one-month Secured Overnight Financing Rate of 0.30 %. The remaining balance includes $ 100 million CAD borrowings remeasured to $ 80.1 million USD, which was subject to the one-month Canadian Dollar Offered Rate of 0.96 %. (b) At December 31, 2021, interest rate was one-month LIBOR plus 1.00 % (c) At March 31, 2022 and December 31, 2021 , one-month LIBOR was 0.45 % and 0.10 %, respectively. (d) The 2022 Unsecured Term Loan was paid in full in February 2022, with borrowings from the unsecured revolving credit facility . At March 31, 2022 , the weighted average interest rate on all outstanding borrowings was 2.69 %, exclusive of interest rate swap agreements. The Company is subject to various financial and operational covenants and financial reporting requirements pursuant to its unsecured credit agreements. These covenants require the Company to maintain certain financial ratios, including leverage, fixed charge coverage, debt service coverage, aggregate debt ratio, consolidated income available for debt to annual debt service charge, total unencumbered assets to total unsecured debt, and secured debt ratio, among others. As of March 31, 2022, and for all periods presented the Company believes it was in compliance with all of its loan covenants. Failure to comply with the covenants would result in a default which, if the Company were unable to cure or obtain a waiver from the lenders, could accelerate the repayment of the obligations. Further, in the event of default, the Company may be restricted from paying dividends to its stockholders in excess of dividends required to maintain its REIT qualification. Accordingly, an event of default could have a material and adverse impact on the Company. On January 28, 2022, the Company amended and restated the unsecured revolving credit facility to increase the available borrowings to $ 1.0 billion and extend the maturity date to March 31, 2026 . In addition to United States Dollars ("USD"), borrowings under the unsecured revolving credit facility can be made in Pound Sterling, Euros or Canadian Dollars ("CAD") up to an aggregate amount of $ 500.0 million. Prior to the amendment, borrowings under the credit facility were subject to interest at variable rates based on LIBOR plus a margin based on the Company's current credit rating ranging between 0.825 % to 1.55 % per annum. Borrowings under the amended credit facility are subject to interest only payments at variable rates equal to the applicable reference rate plus a margin based on the Company's credit rating, ranging between 0.725 % and 1.400 %. In addition, the amended credit facility is subject to a facility fee on the amount of the revolving commitments, based on the Company's credit rating. The applicable facility fee is 0.200 % per annum. For the three months ended March 31, 2022 , the Company incurred $3.8 million in debt issuance costs associated with the unsecured revolving credit facility. For the three months ended March 31, 2021, the Company incurred $ 1.0 million in debt issuance costs associated with the amended 2026 Unsecured Term Loan. For each separate debt instrument, on a lender by lender basis, in accordance with ASC 470-50, Debt Modifications and Extinguishment , the Company performed an assessment of whether the transaction was deemed to be new debt, a modification of existing debt, or an 13 extinguishment of existing debt. Debt issuance costs are either deferred and amortized over the term of the associated debt or expensed as incurred. With respect to the unsecured revolving credit facility amendment, the transaction was deemed to be new debt and therefore, the debt issuance costs incurred during the three months ended March 31, 2022 , have been deferred and are being amortized over the term of the associated debt. With respect to the amended 2026 Unsecured Term Loan, the transaction was deemed to be a modification of existing debt and therefore the $ 0.9 million of debt issuance costs paid to lenders were deferred and are being amortized over the term of the associated debt. The remaining debt issuance costs of $ 0.1 million were expensed as incurred during the three months ended March 31, 2021. Debt issuance costs and original issuance discounts are amortized as a component of Interest expense in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income. The following table summarizes debt issuance cost and original issuance discount amortization: For the Three Months Ended March 31, (in thousands) 2022 2021 Debt issuance costs and original issuance discount amortization $ 856 $ 914 8. Mortgages The Company's mortgages consist of the following: Origination Maturity (in thousands, except interest rates) Date Date Interest March 31, December 31, Lender (Month/Year) (Month/Year) Rate 2022 2021 Wilmington Trust National Association Apr-19 Feb-28 4.92 % $ 46,447 $ 46,760 (a) (b) (c) (d) Wilmington Trust National Association Jun-18 Aug-25 4.36 % 19,454 19,557 (a) (b) (c) (e) PNC Bank Oct-16 Nov-26 3.62 % 16,989 17,094 (b) (c) T2 Durham I, LLC Jul-21 Jul-24 Greater of Prime + 1.25 % or 5.00 % 7,500 7,500 (b) (f) Aegon Apr-12 Oct-23 6.38 % 6,044 6,249 (b) (g) Total mortgages 96,434 97,160 Debt issuance costs, net ( 293 ) ( 314 ) Mortgages, net $ 96,141 $ 96,846 (a) Non-recourse debt includes the indemnification/guaranty of the Corporation and/or OP pertaining to fraud, environmental claims, insolvency, and other matters. (b) Debt secured by related rental property and lease rents. (c) Debt secured by guaranty of the OP. (d) Mortgage was assumed in April 2019 as part of the acquisition of the related property. The debt was recorded at fair value at the time of assumption. (e) Mortgage was assumed in June 2018 as part of the acquisition of the related property. The debt was recorded at fair value at the time of assumption. (f) Mortgage is subject to interest at a daily floating annual rate equal to the Prime Rate plus 1.25 %, but no less than 5.00 % per annum. At March 31, 2022 and December 31, 2021, the interest rate was 5.00 %. (g) Mortgage was assumed in April 2012 as part of the acquisition of the related property. The debt was recorded at fair value at the time of the assumption. At March 31, 2022 , investment in rental property of $ 160.6 million was pledged as collateral against the Company's mortgages. Estimated future principal payments to be made under the above mortgages and the Company's unsecured credit agreements (see Note 7) at March 31, 2022 are as follows: (in thousands) Remainder of 2022 $ 2,180 2023 7,582 2024 199,760 2025 20,195 2026 682,961 Thereafter 889,874 $ 1,802,552 Certain of the Company's mortgages provide for prepayment fees and can be terminated under certain events of default as defined under the related agreements. These prepayment fees are not reflected as part of the table above. 14 9. Interest Rate Swaps Interest rate swaps were entered into with certain financial institutions in order to mitigate the impact of interest rate variability over the term of the related debt agreements. The interest rate swaps are considered cash flow hedges. In order to reduce counterparty concentration risk, the Company has a diversification policy for institutions that serve as swap counterparties. Under these agreements, the Company receives monthly payments from the counterparties on these interest rate swaps equal to the related variable interest rates multiplied by the outstanding notional amounts. Certain interest rate swaps amortize on a monthly basis. In turn, the Company pays the counterparties each month an amount equal to a fixed rate multiplied by the related outstanding notional amounts. The intended net impact of these transactions is that the Company pays a fixed interest rate on its variable-rate borrowings. The following is a summary of the Company's outstanding interest rate swap agreements: (in thousands, except interest rates) March 31, 2022 December 31, 2021 Counterparty Maturity Date Fixed Rate Notional Amount Fair Value Notional Amount Fair Value Wells Fargo Bank, N.A. October 2024 2.72 % $ 15,000 $ ( 102 ) $ 15,000 $ ( 702 ) Capital One, National Association December 2024 1.58 % 15,000 341 15,000 ( 241 ) Bank of Montreal January 2025 1.91 % 25,000 366 25,000 ( 649 ) Truist Financial Corporation April 2025 2.20 % 25,000 187 25,000 ( 905 ) Bank of Montreal July 2025 2.32 % 25,000 105 25,000 ( 1,049 ) Truist Financial Corporation July 2025 1.99 % 25,000 364 25,000 ( 767 ) Truist Financial Corporation December 2025 2.30 % 25,000 117 25,000 ( 1,125 ) Bank of Montreal January 2026 1.92 % 25,000 456 25,000 ( 760 ) Bank of Montreal January 2026 2.05 % 40,000 545 40,000 ( 1,415 ) Capital One, National Association January 2026 2.08 % 35,000 442 35,000 ( 1,274 ) Truist Financial Corporation January 2026 1.93 % 25,000 449 25,000 ( 768 ) Capital One, National Association April 2026 2.68 % 15,000 ( 155 ) 15,000 ( 941 ) Capital One, National Association July 2026 1.32 % 35,000 1,520 35,000 ( 205 ) Bank of Montreal December 2026 2.33 % 10,000 12 10,000 ( 538 ) Bank of Montreal December 2026 1.99 % 25,000 410 25,000 ( 936 ) Toronto-Dominion Bank March 2027 2.46 % 16,024 224 &#x2014; &#x2014; Wells Fargo Bank, N.A. April 2027 2.72 % 25,000 ( 452 ) 25,000 ( 1,887 ) Bank of Montreal December 2027 2.37 % 25,000 ( 80 ) 25,000 ( 1,570 ) Capital One, National Association December 2027 2.37 % 25,000 ( 91 ) 25,000 ( 1,575 ) Wells Fargo Bank, N.A. January 2028 2.37 % 75,000 ( 274 ) 75,000 ( 4,741 ) Bank of Montreal May 2029 2.09 % 25,000 289 25,000 ( 1,316 ) Regions Bank May 2029 2.11 % 25,000 243 25,000 ( 1,356 ) Regions Bank June 2029 2.03 % 25,000 370 25,000 ( 1,222 ) U.S. Bank National Association June 2029 2.03 % 25,000 386 25,000 ( 1,220 ) U.S. Bank National Association August 2029 1.35 % 25,000 1,541 25,000 ( 9 ) Regions Bank March 2032 2.69 % 16,024 172 &#x2014; &#x2014; U.S. Bank National Association March 2032 2.70 % 16,024 186 &#x2014; &#x2014; Bank of Montreal March 2034 2.81 % 32,046 219 &#x2014; &#x2014; $ 720,118 $ 7,790 $ 640,000 $ ( 27,171 ) At March 31, 2022, the weighted average fixed rate on all outstanding interest rate swaps was 2.17 %. The total amounts recognized, and the location in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income, from converting from variable rates to fixed rates under these agreements were as follows: Reclassification from Amount of Gain Accumulated Other Total Interest Expense Recognized in Comprehensive Income (Loss) Presented in the Condensed (in thousands) Accumulated Other Consolidated Statements of Comprehensive Amount of Income and Comprehensive For the Three Months Ended March 31, Income (Loss) Location Loss Income 2022 $ 34,961 Interest expense $ 3,865 $ 16,896 2021 28,680 Interest expense 4,016 16,108 Amounts related to the interest rate swaps expected to be reclassified out of Accumulated other comprehensive income (loss) to Interest expense during the next twelve months are estimated to be a loss of $ 4.9 million. The Company is exposed to credit risk in the event of non-performance by the counterparties of the swaps. The Company minimizes the risk exposure by limiting counterparties to major banks who meet established credit and capital guidelines. 15 10. Credit Risk Concentrations The Company maintained bank balances that, at times, exceeded the federally insured limit during the three months ended March 31, 2022. The Company has not experienced losses relating to these deposits and management does not believe that the Company is exposed to any significant credit risk with respect to these amounts. For the three months ended March 31, 2022 and 2021 , the Company had no individual tenants or common franchises that accounted for more than 10% of Lease revenues, net. 11. Equity The Company established an at-the-market common equity offering program ("ATM Program"), through which it may, from time to time, publicly offer and sell shares of common stock having an aggregate gross sales price of up to $ 400.0 million. The ATM Program provides for forward sale agreements, enabling the Company to set the price of shares upon pricing the offering, while delaying the issuance of shares and the receipt of the net proceeds. As of March 31, 2022 , the Company has issued common stock with an aggregate gross sales price of $ 164.7 million under the ATM Program and could issue additional common stock with an aggregate sales price of up to $ 235.3 million under the ATM Program. The following table presents information about the Company's ATM Program activity: For the Three Months Ended (in thousands, except per share amounts) March 31, 2022 Number of common shares issued 6,273 Weighted average sale price per share $ 21.82 Net proceeds $ 134,326 Gross proceeds 136,544 There was no ATM Program activity during the three months ended March 31, 2021. 12. Stock-Based Compensation Restricted Stock Awards The Company awarded 142,045 and 199,430 shares of RSAs, during the three months ended March 31, 2022 and 2021 , respectively, to certain officers and employees under the Equity Incentive Plan. The holder of RSAs is generally entitled at all times on and after the date of issuance of the restricted common shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. The RSAs vest over a one , three, or four year period from the date of the grant and are subject to the employee's continued service through the applicable vesting dates and in accordance with the terms of the individual award agreements. The weighted average value of awards granted during the three months ended March 31, 2022 and 2021, were $ 21.66 and $ 18.66 , respectively, which were based on the market price per share of the Company's common stock on the grant date. The following table presents information about the Company's RSAs: For the Three Months Ended March 31, (in thousands) 2022 2021 Compensation cost $ 610 $ 1,695 Dividends declared on unvested RSAs 97 104 Fair value of shares vested during the period 3,209 2,522 (in thousands, except recognition period) March 31, 2022 December 31, 2021 Unamortized value of RSAs $ 7,177 $ 4,715 Weighted average amortization period (in years) 2.8 2.4 16 The following table presents information about the Company's RSA activity: For the Three Months Ended March 31, 2022 2021 (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Number of Shares Weighted Average Grant Date Fair Value per Share Unvested at beginning of period 372 $ 19.62 341 $ 20.50 Granted 142 21.66 199 18.66 Vested ( 146 ) 19.80 ( 124 ) 20.26 Forfeited ( 1 ) 26.41 &#x2014; &#x2014; Unvested at end of period 367 20.33 416 19.62 Performance-based Restricted Stock Units The Company issued target grants of 121,883 and 132,189 PRSUs, during the three months ended March 31, 2022 and 2021 , respectively, under the Equity Incentive Plan to the officers of the Company. The awards are non-vested restricted stock units where the vesting percentages and the ultimate number of units vesting will be measured 50 % based on the relative total shareholder return ("rTSR") of the Company's common stock as compared to the rTSR of peer companies, as identified in the grant agreements, over a three-year period, and 50% based on the rTSR of the Company's common stock as compared to the rTSR of the MSCI US REIT Index over a three year measurement period. Vesting percentages range from 0 % to 200 % with a target of 100 %. rTSR means the percentage appreciation in the fair market value of one share over the three year measurement period beginning on the date of grant, assuming the reinvestment of dividends on the ex-dividend date. The target number of units is based on achieving a rTSR equal to the 55 th percentile of the peer companies and MSCI US REIT Index. Dividends accrue during the measurement period and will be paid on the PRSUs ultimately earned at the end of the measurement period in either cash or common stock, at the direction of the Board's Compensation Committee. The grant date fair value of the PRSUs was measured using a Monte Carlo simulation model based on assumptions including share price volatility. The following table presents information about the Company's PRSUs: For the Three Months Ended March 31, (in thousands, except recognition period) 2022 2021 Compensation cost $ 319 $ 74 March 31, 2022 December 31, 2021 Unamortized value of PRSUs $ 5,011 $ 1,931 Weighted average amortization period (in years) 2.6 2.2 The following table presents information about the Company's PRSU activity: For the Three Months Ended March 31, 2022 2021 (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Number of Shares Weighted Average Grant Date Fair Value per Share Unvested at beginning of period 110 $ 24.40 &#x2014; $ &#x2014; Granted 122 27.93 132 24.40 Vested &#x2014; &#x2014; &#x2014; &#x2014; Forfeited &#x2014; &#x2014; ( 22 ) 24.40 Unvested at end of period 232 26.25 110 24.40 17 13. Earnings per Share The following table summarizes the components used in the calculation of basic and diluted earnings per share ("EPS"): For the Three Months Ended March 31, (in thousands, except per share amounts) 2022 2021 Basic earnings: Net earnings attributable to Broadstone Net Lease, Inc. common shareholders $ 26,758 $ 22,223 Less: earnings allocated to unvested restricted shares ( 97 ) ( 104 ) Net earnings used to compute basic earnings per common share $ 26,661 $ 22,119 Diluted earnings: Net earnings used to compute basic earnings per share $ 26,661 $ 22,119 Net earnings attributable to non-controlling interests 1,683 1,737 Net earnings used to compute diluted earnings per common share $ 28,344 $ 23,856 Weighted average number of common shares outstanding 164,179 145,672 Less: weighted average unvested restricted shares (a) ( 370 ) ( 334 ) Weighted average number of common shares outstanding used in basic earnings per common share 163,809 145,338 Effects of restricted stock units (b) 156 &#x2014; Effects of convertible membership units (c) 10,323 11,386 Weighted average number of common shares outstanding used in diluted earnings per common share 174,288 156,724 Basic earnings per share $ 0.16 $ 0.15 Diluted earnings per share $ 0.16 $ 0.15 (a) Represents the weighted average effects of 366,912 and 415,932 unvested restricted shares of common stock as of March 31, 2022 and 2021, respectively, which will be excluded from the computation of earnings per share until they vest. The shares of restricted common stock were not included in the calculation of diluted earnings per share, as the effect of doing so would have been anti-dilutive. (b) Represents the weighted average effects of shares of common stock to be issued as though the end of the period were the end of the performance period (see Note 12). (c) Represents the weighted average effects of 10,323,206 and 11,360,080 OP Units outstanding at March 31, 2022 and 2021 , respectively. OP Units are included in the diluted earnings per share calculation. However, because such OP Units would also require that the share of the net income attributable to such OP units also be added back to net income, there is no effect to EPS. 14. Supplemental Cash Flow Disclosures Cash paid for interest was $ 12.0 million and $ 9.4 million for the three months ended March 31, 2022 and 2021 , respectively. Cash paid for income taxes was $ 0.5 million and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively. The following are non-cash transactions and have been excluded from the accompanying Condensed Consolidated Statements of Cash Flows: &#x2022; At March 31, 2022 and 2021 , dividend amounts declared and accrued but not yet paid amounted to $ 47.7 million and $ 39.3 million, respectively. &#x2022; At March 31, 2022 and 2021, the Company adjusted the carrying value of Non-controlling interests to reflect their share of the book value of the OP by $ 1.9 million and $( 0.1 ) million, respectively, with the reallocation recorded as an offset to Additional paid-in capital and Accumulated other comprehensive income (loss). 18 15. Commitments and Contingencies Litigation From time to time, the Company is a party to various litigation matters incidental to the conduct of the Company's business. While the resolution of such matters cannot be predicted with certainty, based on currently available information, the Company does not believe that the final outcome of any of these matters will have a material effect on its consolidated financial position, results of operations, or liquidity. Property and Acquisition Related In connection with ownership and operation of real estate, the Company may potentially be liable for cost and damages related to environmental matters. The Company is not aware of any non-compliance, liability, claim, or other environmental condition that would have a material effect on its consolidated financial position, results of operations, or liquidity. The Company has a commitment to fund a building expansion expected to be completed in 2022, totaling $ 17.4 million as of March 31, 2022, in exchange for an increase in rent contractually scheduled to commence in August 2022. The Company is a party to three separate tax protection agreements with the contributing members of three distinct UPREIT transactions and to the Founding Owners' Tax Protection Agreement in connection with the Internalization. The tax protection agreements require the Company to indemnify the beneficiaries in the event of a sale, exchange, transfer, or other disposal of the contributed property, and in the case of the Founding Owners' Tax Protection Agreement, the entire Company, in a taxable transaction that would cause such beneficiaries to recognize a gain that is protected under the agreements, subject to certain exceptions. The Company is required to allocate an amount of nonrecourse liabilities to each beneficiary that is at least equal to the minimum liability amount, as contained in the agreements. The minimum liability amount and the associated allocation of nonrecourse liabilities are calculated in accordance with applicable tax regulations, are completed at the OP level, and do not represent GAAP accounting. Therefore, there is no impact to the Condensed Consolidated Financial Statements. Based on values as of March 31, 2022, taxable sales of the applicable properties would trigger liability under the agreements of approxi mately $ 22.3 million. Ba sed on information available, the Company does not believe that the events resulting in damages as detailed above have occurred or are likely to occur in the foreseeable future. In the normal course of business, the Company enters into various types of commitments to purchase real estate properties. These commitments are generally subject to the Company's customary due diligence process and, accordingly, a number of specific conditions must be met before the Company is obligated to purchase the properties. 16. Subsequent Events On April 15, 2022, the Company paid distributions totaling $ 47.5 million. On April 29, 2022 , the Board of Directors declared a quarterly distribution of $ 0.270 per share on the Company's common stock and OP Units for the second quarter of 2022, which will be payable on or before July 15, 2022 to stockholders and unit holders of record as of June 30, 2022 . Subsequent to March 31, 2022 , the Company continued to expand its operations through the acquisition of additional rental property and associated intangible assets and liabilities. The Company acquired approximately $ 27.2 million of rental property and associated intangible assets and liabilities (see Note 3). Through May 2, 2022, the Company issued 542,929 shares of common stock at a weighted average sale price of $ 21.88 per share under the ATM Program. The net proceeds, after deducting $ 0.2 million of commissions and other offering costs, were $ 11.7 million. 19 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Except where the context suggests otherwise, as used in this Quarterly Report on Form 10-Q, the terms "BNL," "we," "us," "our," and "our company" refer to Broadstone Net Lease, Inc., a Maryland corporation incorporated on October 18, 2007, and, as required by context, Broadstone Net Lease, LLC, a New York limited liability company, which we refer to as the or our "OP," and to their respective subsidiaries. The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes to the Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q. Cautionary Note Regarding F orward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views regarding our business, financial performance, growth prospects and strategies, market opportunities, and market trends, that are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "approximately," "projects," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of these words or other comparable words. All of the forward-looking statements included in this Quarterly Report on Form 10-Q are subject to various risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results, performance, and achievements could differ materially from those expressed in or by the forward-looking statements and may be affected by a variety of risks and other factors. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from such forward-looking statements. Important factors that could cause results to differ materially from the forward-looking statements are described in Item 1. "Business," Item 1A. "Risk Factors," and Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2021 Annual Report on Form 10-K, as filed with the SEC on February 23, 2022. The "Risk Factors" of our 2021 Annual Report should not be construed as exhaustive and should be read in conjunction with other cautionary statements included elsewhere in this Quarterly Report on Form 10-Q. You are cautioned not to place undue reliance on any forward-looking statements included in this Quarterly Report on Form 10-Q. All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and the risk that actual results, performance, and achievements will differ materially from the expectations expressed in or referenced by this Quarterly Report on Form 10-Q will increase with the passage of time. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law. Regulation FD Disclosures We use any of the following to comply with our disclosure obligations under Regulation FD: SEC filings, press releases, public conference calls, or our website. We routinely post important information on our website at www.Broadstone.com , including information that may be deemed material. We encourage our shareholders and others interested in our company to monitor these distribution channels for material disclosures. Our website address is included in this Quarterly Report as a textual reference only and the information on the website is not incorporated by reference in this Quarterly Report. Explanatory Note and Certain Defined Terms Unless the context otherwise requires, the following terms and phrases are used throughout this MD&A as described below: &#x2022; "annualized base rent" or "ABR" means the annualized contractual cash rent due for the last month of the reporting period, excluding the impacts of short-term rent deferrals, abatements, free rent, or discounted rent periods and adjusted to remove rent from properties sold during the month and to include a full month of contractual cash rent for properties acquired during the month; &#x2022; "cash capitalization rate" represents the estimated first year cash yield to be generated on a real estate investment property, which was estimated at the time of investment based on the contractually specified cash base rent for the first full year after the date of the investment, divided by the purchase price for the property excluding capitalized acquisitions costs; 20 &#x2022; "CPI" means the Consumer Price Index for All Urban Consumers (CPI-U): U.S. City Average, All Items, as published by the U.S. Bureau of Labor Statistics, or other similar index which is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services; &#x2022; "occupancy" or a specified percentage of our portfolio that is "occupied" or "leased" means as of a specified date the quotient of (1) the total rentable square footage of our properties minus the square footage of our properties that are vacant and from which we are not receiving any rental payment, and (2) the total square footage of our properties; and &#x2022; "Revolving Credit Facility" means our $1.0 billion unsecured revolving credit facility, dated January 28, 2022, with J.P. Morgan Chase Bank, N.A. and the other lenders party thereto. Overv iew We are an internally-managed real estate investment trust ("REIT") that acquires, owns, and manages primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Since our inception in 2007, we have selectively invested in net leased assets in the industrial, healthcare, restaurant, retail, and office property types. During the three months ended March 31, 2022, we invested $210.0 million, excluding capitalized acquisition costs, in 27 properties at a weighted average initial cash capitalization rate of 5.7%. The acquisitions included properties in restaurants (50%, based on ABR), retail (37%), and industrial (13%) asset classes located across 14 U.S. states and four Canadian provinces with a weighted average initial lease term and minimum annual rent increases of 19.3 years and 1.5%, respectively. As of March 31, 2022, our portfolio has grown to 752 properties, with 745 properties located in 43 U.S. states and seven properties located in four Canadian provinces. We focus on investing in real estate that is operated by creditworthy single tenants in industries characterized by positive business drivers and trends. We target properties that are an integral part of the tenants' businesses and are therefore opportunities to secure long-term net leases. Through long-term net leases, our tenants are able to retain operational control of their strategically important locations, while allocating their debt and equity capital to fund core business operations rather than real estate ownership. - Diversified Portfolio . As of March 31, 2022, our portfolio comprised approximately 32.8 million rentable square feet of operational space, and was highly diversified based on property type, geography, tenant, and industry, and is cross-diversified within each ( e.g., property-type diversification within a geographic concentration): &#x2022; Property Type : We are focused primarily on industrial, healthcare, restaurant, retail, and office property types based on our extensive experience in and conviction around these sectors. Within these sectors, we have meaningful concentrations in manufacturing, distribution and warehouse, casual dining, clinical, quick service restaurants, food processing, general merchandise, and flex/research and development. &#x2022; Geographic Diversification : Our properties are located in 43 U.S. states and four Canadian provinces, with no single geographic concentration exceeding 10.5% of our ABR. &#x2022; Tenant and Industry Diversification : Our properties are occupied by approximately 210 different commercial tenants who operate 198 different brands that are diversified across 56 differing industries, with no single tenant accounting for more than 2.1% of our ABR. - Strong In-Place Leases with Significant Remaining Lease Term . As of March 31, 2022, our portfolio was approximately 99.8% leased with an ABR weighted average remaining lease term of approximately 10.5 years, excluding renewal options. - Standard Contractual Base Rent Escalation . Approximately 97.3% of our leases have contractual rent escalations, with an ABR weighted average minimum increase of 2.0%. - Extensive Tenant Financial Reporting . Approximately 94.2% of our tenants, based on ABR, provide financial reporting, of which 85.1% are required to provide us with specified financial information on a periodic basis, and an additional 9.1% of our tenants report financial statements publicly, either through SEC filings or otherwise. 21 Real Estate Portf olio Information The following charts summarize our portfolio diversification by property type, tenant, brand, industry, and geographic location as of March 31, 2022. The percentages below are calculated based on our ABR of $347.7 million as of March 31, 2022. Diversification by Property Type 22 Property Type # Properties ABR ($'000s) ABR as a % of Total Portfolio Square Feet ('000s) SF as a % of Total Portfolio Industrial Manufacturing 64 $ 50,797 14.6 % 9,147 27.9 % Distribution & Warehouse 45 49,015 14.1 % 9,221 28.1 % Food Processing 17 22,881 6.6 % 2,636 8.0 % Flex and R&D 7 17,296 5.0 % 1,457 4.4 % Cold Storage 4 12,702 3.6 % 933 2.9 % Services 21 8,548 2.5 % 487 1.5 % Industrial Total 158 161,239 46.4 % 23,881 72.8 % Healthcare Clinical 51 25,735 7.4 % 1,049 3.2 % Healthcare Services 28 12,511 3.6 % 463 1.4 % Animal Health Services 27 10,352 3.0 % 405 1.2 % Surgical 12 10,226 2.9 % 329 1.0 % Life Science 9 7,688 2.2 % 549 1.7 % Untenanted 1 &#x2014; &#x2014; 18 0.1 % Healthcare Total 128 66,512 19.1 % 2,813 8.6 % Restaurant Casual Dining 102 27,008 7.8 % 683 2.1 % Quick Service Restaurants 148 25,022 7.2 % 505 1.5 % Restaurant Total 250 52,030 15.0 % 1,188 3.6 % Retail General Merchandise 120 22,784 6.5 % 1,633 5.0 % Automotive 66 12,084 3.5 % 771 2.4 % Home Furnishings 13 7,030 2.0 % 797 2.4 % Untenanted 1 &#x2014; &#x2014; 34 0.1 % Retail Total 200 41,898 12.0 % 3,235 9.9 % Office Corporate Headquarters 7 10,429 3.0 % 679 2.0 % Strategic Operations 5 9,691 2.8 % 615 1.9 % Call Center 4 5,887 1.7 % 391 1.2 % Office Total 16 26,007 7.5 % 1,685 5.1 % Total 752 $ 347,686 100.0 % 32,802 100.0 % 23 Diversification by Tenant Tenant Property Type # Properties ABR ($'000s) ABR as a % of Total Portfolio Square Feet ('000s) SF as a % of Total Portfolio Jack's Family Restaurants LP * Quick Service Restaurants 43 $ 7,166 2.1 % 147 0.4 % Red Lobster Hospitality & Red Lobster Restaurants LLC * Casual Dining 21 6,699 1.9 % 174 0.5 % Joseph T. Ryerson & Son, Inc Distribution & Warehouse 11 6,395 1.8 % 1,537 4.7 % J. Alexander's, LLC * Casual Dining 16 6,025 1.7 % 131 0.4 % Axcelis Technologies, Inc. Flex and R&D 1 5,991 1.7 % 417 1.3 % Hensley & Company * Distribution & Warehouse 3 5,871 1.7 % 577 1.8 % BluePearl Holdings, LLC ** Animal Health Services 13 5,444 1.6 % 165 0.5 % Dollar General Corporation General Merchandise 55 5,391 1.6 % 510 1.6 % Outback Steakhouse of Florida LLC *1 Casual Dining 22 5,278 1.5 % 140 0.4 % Tractor Supply Company General Merchandise 21 5,269 1.5 % 417 1.3 % Total Top 10 Tenants 206 59,529 17.1 % 4,215 12.9 % Krispy Kreme Doughnut Corporation Quick Service Restaurants/ Food Processing 27 5,034 1.4 % 156 0.5 % Big Tex Trailer Manufacturing, Inc. * Automotive/Distribution & Warehouse/Manufacturing/ Corporate Headquarters 17 4,957 1.4 % 1,302 4.0 % Siemens Medical Solutions USA, Inc. & Siemens Corporation Manufacturing/Flex and R&D 2 4,936 1.4 % 545 1.7 % Santa Cruz Valley Hospital Healthcare Facilities 1 4,500 1.3 % 148 0.4 % Nestle' Dreyer's Ice Cream Company Cold Storage 1 4,476 1.3 % 310 0.9 % Arkansas Surgical Hospital Surgical 1 4,366 1.3 % 129 0.4 % American Signature, Inc. Home Furnishings 6 4,224 1.2 % 474 1.4 % Cascade Aerospace Inc. Manufacturing 1 4,150 1.2 % 231 0.7 % MEC Mountain Equipment Company Ltd. * General Merchandise 6 4,147 1.2 % 199 0.6 % Aventiv Technologies, LLC Corporate Headquarters 1 3,896 1.2 % 154 0.5 % Total Top 20 Tenants 269 $ 104,215 30.0 % 7,863 24.0 % 1 Tenant's properties include 20 Outback Steakhouse restaurants and two Carrabba's Italian Grill restaurants. * Subject to a master lease. ** Includes properties leased by multiple tenants, some, not all, of which are subject to master leases. Diversification by Brand Brand Property Type # Properties ABR ($'000s) ABR as a % of Total Portfolio Square Feet ('000s) SF as a % of Total Portfolio Jack's Family Restaurants * Quick Service Restaurants 43 $ 7,166 2.1 % 147 0.4 % Red Lobster * Casual Dining 21 6,699 1.9 % 174 0.5 % Ryerson Distribution & Warehouse 11 6,395 1.8 % 1,537 4.7 % Axcelis Flex and R&D 1 5,991 1.7 % 417 1.3 % Hensley * Distribution & Warehouse 3 5,871 1.7 % 577 1.8 % BluePearl Veterinary Partners * Animal Health Services 13 5,444 1.6 % 165 0.5 % Dollar General General Merchandise 55 5,391 1.6 % 510 1.6 % Bob Evans Farms *1 Casual Dining/Food Processing 21 5,285 1.5 % 281 0.8 % Tractor Supply Co. General Merchandise 21 5,269 1.5 % 417 1.3 % Krispy Kreme Quick Service Restaurants/ Food Processing 27 5,034 1.4 % 156 0.5 % Total Top 10 Brands 216 58,545 16.8 % 4,381 13.4 % Big Tex Trailers * Automotive/Distribution & Warehouse/Manufacturing/ Corporate Headquarters 17 4,957 1.4 % 1,302 4.0 % Siemens Manufacturing/Flex and R&D 2 4,936 1.4 % 545 1.7 % Outback Steakhouse * Casual Dining 20 4,566 1.4 % 126 0.4 % Wendy's ** Quick Service Restaurants 31 4,554 1.3 % 89 0.3 % Santa Cruz Valley Hospital Healthcare Facilities 1 4,500 1.3 % 148 0.4 % Nestle' Cold Storage 1 4,476 1.3 % 310 0.9 % Arkansas Surgical Hospital Surgical 1 4,366 1.3 % 129 0.4 % Value City Furniture Home Furnishings 6 4,224 1.2 % 474 1.4 % Taco Bell ** Quick Service Restaurants 31 4,172 1.2 % 80 0.2 % Cascade Aerospace Manufacturing 1 4,150 1.2 % 231 0.7 % Total Top 20 Brands 327 $ 103,446 29.8 % 7,815 23.8 % 1 Brand includes one BEF Foods, Inc property and 20 Bob Evans Restaurants, LLC properties. * Subject to a master lease. ** Includes properties leased by multiple tenants, some, not all, of which are subject to master leases. 24 Diversification by Industry Industry # Properties ABR ($'000s) ABR as a % of Total Portfolio Square Feet ('000s) ABR as a % of Total Portfolio Healthcare Facilities 102 $ 53,325 15.3 % 2,029 6.2 % Restaurants 253 52,801 15.2 % 1,230 3.7 % Packaged Foods & Meats 11 16,654 4.8 % 1,820 5.5 % Distributors 26 14,690 4.2 % 2,561 7.8 % Food Distributors 8 14,403 4.1 % 1,786 5.4 % Specialty Stores 31 13,855 4.0 % 1,338 4.1 % Auto Parts & Equipment 39 12,634 3.6 % 2,387 7.3 % Specialized Consumer Services 47 12,116 3.5 % 722 2.2 % Metal & Glass Containers 8 9,898 2.8 % 2,206 6.7 % Healthcare Services 18 9,172 2.6 % 515 1.6 % Home Furnishing 5 8,955 2.6 % 1,785 5.4 % Home Furnishing Retail 16 8,845 2.5 % 1,149 3.5 % Aerospace & Defense 7 8,818 2.5 % 952 2.9 % General Merchandise Stores 85 8,442 2.4 % 765 2.3 % Electronic Components 2 6,806 2.0 % 466 1.4 % Other (41 industries) 92 96,272 27.9 % 11,039 33.8 % Untenanted properties 2 &#x2014; &#x2014; 52 0.2 % Total 752 $ 347,686 100.0 % 32,802 100.0 % 25 Diversification by Geographic Location State / Province # Properties ABR ($'000s) ABR as a % of Total Portfolio Square Feet ('000s) SF as a % of Total Portfolio State / Province # Properties ABR ($'000s) ABR as a % of Total Portfolio Square Feet ('000s) SF as a % of Total Portfolio TX 69 $ 36,443 10.5 % 3,502 10.7 % LA 4 3,400 1.0 % 194 0.6 % IL 27 21,099 6.1 % 2,002 6.1 % NE 6 3,029 0.9 % 509 1.6 % WI 35 19,744 5.7 % 2,069 6.3 % MD 4 2,966 0.8 % 293 0.9 % MI 48 16,700 4.8 % 1,545 4.7 % CO 5 2,796 0.8 % 134 0.4 % FL 44 16,313 4.7 % 849 2.6 % NM 8 2,783 0.8 % 96 0.3 % OH 38 15,655 4.5 % 1,416 4.3 % MS 8 2,772 0.8 % 334 1.0 % CA 10 15,612 4.5 % 1,493 4.6 % IA 4 2,754 0.8 % 622 1.9 % MN 20 13,733 3.9 % 2,244 6.8 % SC 13 2,494 0.7 % 308 0.9 % AZ 9 13,213 3.8 % 909 2.8 % WV 16 2,480 0.7 % 109 0.3 % NC 35 13,023 3.7 % 1,308 4.0 % UT 3 2,379 0.7 % 280 0.9 % IN 29 12,812 3.7 % 1,759 5.4 % CT 2 1,699 0.5 % 55 0.2 % TN 48 12,111 3.5 % 565 1.7 % MT 7 1,563 0.4 % 43 0.1 % AL 52 11,843 3.4 % 863 2.6 % NV 2 1,336 0.4 % 80 0.2 % GA 31 11,124 3.2 % 1,555 4.7 % DE 4 1,154 0.3 % 133 0.4 % NY 26 10,660 3.0 % 680 2.1 % ND 2 943 0.3 % 28 0.1 % MA 5 10,456 3.0 % 1,026 3.1 % VT 2 414 0.1 % 24 0.1 % OK 21 7,583 2.2 % 977 3.0 % WY 1 307 0.1 % 21 0.1 % AR 11 7,548 2.2 % 283 0.9 % SD 1 81 0.1 % 9 0.0 % PA 16 6,960 2.0 % 1,026 3.1 % Total US 745 $ 339,389 97.6 % 32,372 98.7 % KY 23 6,573 1.9 % 703 2.1 % BC 2 $ 4,776 1.4 % 253 0.8 % KS 11 5,488 1.6 % 647 2.0 % ON 3 2,150 0.6 % 101 0.3 % VA 17 5,388 1.5 % 204 0.6 % AB 1 1,010 0.3 % 51 0.1 % NJ 3 4,904 1.4 % 366 1.1 % MB 1 361 0.1 % 25 0.1 % MO 10 4,822 1.4 % 959 2.9 % Total Canada 7 $ 8,297 2.4 % 430 1.3 % WA 15 4,232 1.2 % 150 0.5 % Grand Total 752 $ 347,686 100.0 % 32,802 100.0 % 26 Lease Expirations As of March 31, 2022, the ABR weighted average remaining term of our leases was approximately 10.5 years. Less than 5% of the properties in our portfolio are subject to leases without at least one renewal option. Approximately 66.4% of our ABR was derived from leases that will expire in 2030 and after, and no more than 6.8% of our ABR was derived from leases that expire in any single year prior to 2030. The following chart sets forth our lease expirations based upon the terms of the leases in place as of March 31, 2022. Expiration Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041+ Number of properties 1 7 11 20 35 28 34 71 100 31 54 50 33 16 86 24 33 12 33 71 Number of leases 2 8 11 23 32 28 31 39 56 26 39 24 22 12 21 9 29 7 6 14 27 The following table presents certain information based on lease expirations by year. Amounts are in thousands, except for number of properties. Expiration Year # Properties ABR ($'000s) ABR as a % of Total Portfolio Square Feet ('000s) SF as a % of Total Portfolio 2022 1 $ 1,566 0.5 % 46 0.1 % 2023 7 5,387 1.5 % 538 1.6 % 2024 11 14,031 4.0 % 1,689 5.2 % 2025 20 8,468 2.4 % 698 2.1 % 2026 35 19,207 5.5 % 1,414 4.3 % 2027 28 23,482 6.8 % 2,019 6.2 % 2028 34 22,982 6.6 % 2,291 7.0 % 2029 71 21,988 6.3 % 2,711 8.3 % 2030 100 53,209 15.3 % 5,099 15.5 % 2031 31 7,991 2.3 % 707 2.2 % 2032 54 28,764 8.3 % 3,248 9.9 % 2033 50 18,795 5.4 % 1,950 5.9 % 2034 33 6,200 1.8 % 409 1.3 % 2035 16 11,728 3.4 % 1,552 4.7 % 2036 86 25,720 7.4 % 2,854 8.7 % 2037 24 17,763 5.1 % 1,369 4.2 % 2038 33 6,840 2.0 % 306 0.9 % 2039 12 9,145 2.6 % 933 2.8 % 2040 33 5,945 1.7 % 317 1.0 % 2041 40 18,815 5.4 % 1,637 5.0 % Thereafter 31 19,660 5.7 % 963 2.9 % Untenanted properties 2 &#x2014; &#x2014; 52 0.2 % Total 752 $ 347,686 100.0 % 32,802 100.0 % Results of Operations The following discussion includes the results of our operations for the periods presented. Three Months Ended March 31, 2022 Compared to Three Months Ended December 31, 2021 Lease Revenues, net For the Three Months Ended March 31, December 31, Increase/(Decrease) (in thousands) 2022 2021 $ % Contractual rental amounts billed for operating leases $ 84,396 $ 81,482 $ 2,914 3.6 % Adjustment to recognize contractual operating lease billings on a straight-line basis 5,021 5,372 (351 ) (6.5 )% Net write-offs of accrued rental income (1,326 ) &#x2014; (1,326 ) (100.0 )% Variable rental amounts earned 186 433 (247 ) (57.0 )% Earned income from direct financing leases 723 725 (2 ) (0.3 )% Interest income from sales-type leases 14 15 (1 ) (6.7 )% Operating expenses billed to tenants 4,735 4,464 271 6.1 % Other income from real estate transactions 42 1 41 >100.0 % Adjustment to revenue recognized for uncollectible rental amounts billed, net 50 150 (100 ) (66.7 )% Total Lease revenues, net $ 93,841 $ 92,642 $ 1,199 1.3 % The increase in Lease revenues, net was primarily attributable to growth in our real estate portfolio through accretive property acquisitions closed in the fourth quarter of 2021. During the fourth quarter of 2021, we invested $147.5 million, excluding capitalized acquisition costs, in 36 properties at a weighted average initial cash capitalization rate of 6.0%. Most of these acquisitions closed during the month of December 2021, and therefore did not materially contribute to Lease revenues, net for the three months ended December 31, 2021. 28 Operating Expenses For the Three Months Ended March 31, December 31, Increase/(Decrease) (in thousands) 2022 2021 $ % Operating expenses Depreciation and amortization $ 34,290 $ 33,476 $ 814 2.4 % Property and operating expense 5,044 4,440 604 13.6 % General and administrative 8,828 8,526 302 3.5 % Provision for impairment of investment in rental properties &#x2014; 207 (207 ) (100.0 )% Total operating expenses $ 48,162 $ 46,649 $ 1,513 3.2 % Depreciation and amortization The increase in depreciation and amortization for the three months ended March 31, 2022 was primarily due to growth in our real estate portfolio. Other income (expenses) For the Three Months Ended March 31, December 31, Increase/(Decrease) (in thousands) 2022 2021 $ % Other income (expenses) Interest income $ &#x2014; $ 6 $ (6 ) (100.0 )% Interest expense (16,896 ) (16,997 ) (101 ) (0.6 )% Gain on sale of real estate 1,196 3,732 (2,536 ) (68.0 )% Income taxes (412 ) (457 ) (45 ) (9.8 )% Other expenses (1,126 ) (51 ) 1,075 >100.0 % Gain on sale of real estate Our recognition of a gain or loss on the sale of real estate varies from transaction to transaction based on fluctuations in asset prices and demand in the real estate market. During the three months ended March 31, 2022, we recognized a gain of $1.2 million on the sale of one property, compared to gains of $3.7 million on the sale of six properties during the three months ended December 31, 2021. Our proactive asset management strategy includes determining to sell any of our properties where we believe the risk profile has changed and become misaligned with our then current risk-adjusted return objectives. Other expenses The increase in other expenses during the three months ended March 31, 2022 was primarily due to $1.1 million of unrealized foreign exchange loss recognized on the quarterly remeasurement of our $100 million CAD revolving borrowings. Net income and Net earnings per diluted share For the Three Months Ended March 31, December 31, Increase/(Decrease) (in thousands, except per share data) 2022 2021 $ % Net income $ 28,441 $ 32,226 $ (3,785 ) (11.7 )% Net earnings per diluted share 0.16 0.19 (0.03 ) (15.8 )% The decrease in net income is primarily attributable to $2.5 million decrease in gain on sale of real estate, $1.1 million increase in other expenses, $0.8 million increase in depreciation and amortization, $0.6 million increase in property and operating expenses, partially offset by an increase in $1.2 million of revenue associated with growth in our real estate portfolio. GAAP net income includes items such as gain or loss on sale of real estate and provisions for impairment, among others, which can vary from quarter to quarter and impact period-over-period comparisons. 29 Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021 Lease Revenues, net For the Three Months Ended March 31, Increase/(Decrease) (in thousands) 2022 2021 $ % Contractual rental amounts billed for operating leases $ 84,396 $ 73,245 $ 11,151 15.2 % Adjustment to recognize contractual operating lease billings on a straight-line basis 5,021 4,809 212 4.4 % Net write-offs of accrued rental income (1,326 ) (442 ) (884 ) >100.0 % Variable rental amounts earned 186 91 95 >100.0 % Earned income from direct financing leases 723 730 (7 ) (1.0 )% Interest income from sales-type leases 14 14 &#x2014; &#x2014; % Operating expenses billed to tenants 4,735 4,388 347 7.9 % Other income from real estate transactions 42 5 37 >100.0 % Adjustment to revenue recognized for uncollectible rental amounts billed, net 50 (142 ) 192 <(100.0 )% Total Lease revenues, net $ 93,841 $ 82,698 $ 11,143 13.5 % The increase in Lease revenues, net was primarily attributable to growth in our real estate portfolio through accretive property acquisitions closed since March 31, 2021. During the twelve months ended March 31, 2022, we invested $777.4 million, excluding capitalized acquisition costs, in 115 properties at a weighted average initial cash capitalization rate of 6.1%. Operating Expenses For the Three Months Ended March 31, Increase/(Decrease) (in thousands) 2022 2021 $ % Operating expenses Depreciation and amortization $ 34,290 $ 30,713 $ 3,577 11.6 % Property and operating expense 5,044 4,605 439 9.5 % General and administrative 8,828 10,633 (1,805 ) (17.0 )% Provision for impairment of investment in rental properties &#x2014; 2,012 (2,012 ) (100.0 )% Total operating expenses $ 48,162 $ 47,963 $ 199 0.4 % Depreciation and amortization The increase in depreciation and amortization for the three months ended March 31, 2022 was primarily due to growth in our real estate portfolio. General and administrative The decrease in general and administrative expenses mainly reflects decreased severance associated with the departure of an executive officer during the three months ended March 31, 2021. Provision for impairment of investment in rental properties During the three months ended March 31, 2022, we did not recognize any impairment on our investments in rental properties, compared to $2.0 million during the three months ended March 31, 2021. The following table presents the impairment charges for the respective periods: For the Three Months Ended March 31, (in thousands, except number of properties) 2022 2021 Number of properties &#x2014; 1 Carrying value prior to impairment charge $ &#x2014; $ 2,818 Fair value &#x2014; 806 Impairment charge $ &#x2014; $ 2,012 30 The timing and amount of impairment fluctuates from period to period depending on the specific facts and circumstances. Other income (expenses) For the Three Months Ended March 31, Increase/(Decrease) (in thousands) 2022 2021 $ % Other income (expenses) Interest income $ &#x2014; $ 5 $ (5 ) (100.0 )% Interest expense (16,896 ) (16,108 ) 788 4.9 % Cost of debt extinguishment &#x2014; (126 ) (126 ) (100.0 )% Gain on sale of real estate 1,196 4,733 (3,537 ) (74.7 )% Income taxes (412 ) (413 ) (1 ) (0.2 )% Change in fair value of earnout liability &#x2014; 1,124 (1,124 ) (100.0 )% Other (expenses) income (1,126 ) 10 (1,136 ) <(100.0 )% Gain on sale of real estate Our recognition of a gain or loss on the sale of real estate varies from transaction to transaction based on fluctuations in asset prices and demand in the real estate market. During the three months ended March 31, 2022, we recognized a gain of $1.2 million on the sale of one property, compared to gains of $4.7 million on the sale of eight properties during the three months ended March 31, 2021. Our proactive asset management strategy includes determining to sell any of our properties where we believe the risk profile has changed and become misaligned with our then current risk-adjusted return objectives. Change in fair value of earnout liability The fair value of the earnout liability was remeasured each reporting period, with changes recorded as Change in fair value of earnout liability in the Condensed Consolidated Statements of Income and Comprehensive Income. All earnout milestones were achieved during the year ended December 31, 2021, therefore there is no change in the fair value of the earnout liability during the three months ended March 31, 2022. The change in the fair value of the earnout liability during the three months ended March 31, 2021 reflected a decrease in our share price as compared to December 31, 2020. Other (expenses) income The increase in other expenses during the three months ended March 31, 2022 was primarily due to $1.1 million of unrealized foreign exchange loss recognized on the quarterly remeasurement of our $100 million CAD revolving borrowings. Net income and Net earnings per diluted share For the Three Months Ended March 31, Increase/(Decrease) (in thousands, except per share data) 2022 2021 $ % Net income $ 28,441 $ 23,960 $ 4,481 18.7 % Net earnings per diluted share 0.16 0.15 0.01 6.7 % The increase in net income is primarily due to revenue growth of $11.1 million, a $2.0 million decrease in impairment of investment in rental properties, and a $1.8 million decrease in general and administrative expenses. These factors were partially offset by a $3.6 million increase in depreciation and amortization, a $3.5 million decrease on gain on sale of real estate, a $1.1 million increase in other expense, a $1.1 million decrease in change in fair value of earnout liability, and a $0.8 million increase in interest expense. GAAP net income includes items such as gain or loss on sale of real estate and provisions for impairment, among others, which can vary from quarter to quarter and impact period-over-period comparisons. Liquidity and Cap ital Resources General We acquire real estate using a combination of debt and equity capital and with cash from operations that is not otherwise distributed to our stockholders. Our focus is on maximizing the risk-adjusted return to our stockholders through an appropriate balance of debt and equity in our capital structure. We are committed to maintaining an investment grade balance sheet through active management of our leverage profile and overall liquidity position. We believe our leverage strategy has allowed us to take advantage of the lower cost of debt while simultaneously strengthening our balance sheet, as evidenced by our current investment grade credit ratings of 'BBB' from S&P Global Ratings ("S&P") and 'Baa2' from Moody's Investors Service ("Moody's"). We manage our leverage profile using a ratio of 31 Net Debt to Annualized Adjusted EBITDAre, a non-GAAP financial measure, 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 lenders and with rating agencies regarding our credit rating. We seek to maintain on a sustained basis a Net Debt to Annualized Adjusted EBITDAre ratio that is generally less than 6.0x. As of March 31, 2022, we had total debt outstanding of $1.8 billion, Net Debt of $1.7 billion, and a Net Debt to Annualized Adjusted EBITDAre ratio of 5.14x. Net Debt and Annualized Adjusted EBITDAre are non-GAAP financial measures, and Annualized Adjusted EBITDAre is calculated based upon EBITDA, EBITDAre, and Adjusted EBITDAre, each of which is also a non-GAAP financial measure. Refer to Non-GAAP Measures below for further details concerning our calculation of non-GAAP measures and reconciliations to the comparable GAAP measure. Liquidity/REIT Requirements Liquidity is a measure of our ability to meet potential cash requirements, including our ongoing commitments to repay debt, fund our operations, acquire properties, make distributions to our stockholders, and other general business needs. As a REIT, we are required to distribute to our stockholders at least 90% of our REIT taxable income determined without regard to the dividends paid deduction and excluding net capital gains, on an annual basis. As a result, it is unlikely that we will be able to retain substantial cash balances to meet our long-term liquidity needs, including repayment of debt and the acquisition of additional properties, from our annual taxable income. Instead, we expect to meet our long-term liquidity needs primarily by relying upon external sources of capital. Short-term Liquidity Requirements Our short-term liquidity requirements consist primarily of funds necessary to pay for our operating expenses, including our general and administrative expenses as well as interest payments on our outstanding debt, to pay distributions, and to fund our acquisitions that are under control or expected to close within a short time period. We do not currently anticipate making significant capital expenditures or incurring other significant property costs because of the strong occupancy levels across our portfolio and the net lease nature of our leases. We expect to meet our short-term liquidity requirements primarily from cash and cash equivalents balances and net cash provided by operating activities, supplemented by borrowings under our Revolving Credit Facility. We intend to match fund our acquisitions with an appropriate mix of debt and equity capital. We use cash on hand and borrowings under our Revolving Credit Facility to initially fund acquisitions, which are subsequently repaid or replaced with proceeds from our equity and debt capital markets activities. As detailed in the contractual obligations table below, we have approximately $51.9 million of expected obligations due throughout the remainder of 2022, primarily consisting of $48.4 million of interest expense due, including the impact of our interest rate swaps, and $2.2 million of mortgage maturities. We expect our cash provided by operating activities, as discussed below, will be sufficient to pay for our current obligations including interest expense on our borrowings. We expect to either repay the maturing mortgages with available cash on hand generated from our results of operations or borrowings under our Revolving Credit Facility, or refinance with property-level borrowings. Long-term Liquidity Requirements Our long-term liquidity requirements consist primarily of funds necessary to repay debt and invest in additional revenue generating properties. We expect to source debt capital from unsecured term loans from commercial banks, revolving credit facilities, private placement senior unsecured notes, and public bond offerings. The source and mix of our debt capital in the future will be impacted by market conditions as well as our continued focus on lengthening our debt maturity profile to better align with our portfolio's long-term leases, staggering debt maturities to reduce the risk that a significant amount of debt will mature in any single year in the future, and managing our exposure to interest rate risk. With outstanding borrowings of $266.1 million at March 31, 2022, we have $733.9 million of available capacity under our Revolving Credit Facility. We expect to meet our long-term liquidity requirements primarily from borrowings under our Revolving Credit Facility, future debt and equity financings, and proceeds from limited sales of our properties. Our ability to access these capital sources may be impacted by unfavorable market conditions, particularly in the debt and equity capital markets, that are outside of our control. In addition, our success will depend on our operating performance, our borrowing restrictions, our degree of leverage, and other factors. Our acquisition growth strategy significantly depends on our ability to obtain acquisition financing on favorable terms. We seek to reduce the risk that long-term debt capital may be unavailable to us by strengthening our balance sheet by investing in real estate with creditworthy tenants and lease guarantors, and by maintaining an appropriate mix of debt and equity capitalization. We also, from time to time, obtain or assume non-recourse mortgage financing from banks and insurance companies secured by mortgages on the corresponding specific property. Mortgages, however, are not currently a strategic focus of the active management of our capital structure. 32 Equity Capital Resources Our equity capital is primarily provided through our at-the-market common equity offering program ("ATM Program"), as well as follow-on equity offerings. Under the terms of our ATM Program we may, from time to time, publicly offer and sell shares of our common stock having an aggregate gross sales price of up to $400 million. The ATM Program provides for forward sale agreements, enabling us to set the price of shares upon pricing the offering while delaying the issuance of shares and the receipt of the net proceeds. As of March 31, 2022, we have issued common stock with an aggregate gross sales price of $164.7 million under the ATM Program and could issue additional common stock with an aggregate sales price of up to $235.3 million. During the three months ended March 31, 2022, we issued 6,273,000 shares of common stock under our ATM Program, at a weighted average sale price of $21.82 per share. The net proceeds, after deducting $1.9 million for commissions and $0.3 million for other issuance expenses, were $134.3 million. Our public offerings have been used to repay debt, fund acquisitions, and for other general corporate purposes. As we continue to invest in accretive real estate properties, we expect to balance our debt and equity capitalization, while maintaining a Net Debt to Annualized Adjusted EBITDAre ratio below 6.0x on a sustained basis, through the anticipated use of follow-on equity offerings and the ATM Program. Unsecured Indebtedness and Capital Markets Activities as of and for the Three Months Ended March 31, 2022 The following table sets forth our outstanding Revolving Credit Facility, Unsecured Term Loans and Senior Unsecured Notes at March 31, 2022. (in thousands, except interest rates) Outstanding Balance Interest Rate Maturity Date Unsecured revolving credit facility $ 266,118 Applicable reference rate + 0.85% (a) Mar. 2026 Unsecured term loans: 2024 Unsecured Term Loan 190,000 one-month LIBOR + 1.00% Jun. 2024 2026 Unsecured Term Loan 400,000 one-month LIBOR + 1.00% Feb. 2026 Total unsecured term loans 590,000 Senior unsecured notes: 2027 Senior Unsecured Notes - Series A 150,000 4.84% Apr. 2027 2028 Senior Unsecured Notes - Series B 225,000 5.09% Jul. 2028 2030 Senior Unsecured Notes - Series C 100,000 5.19% Jul. 2030 2031 Senior Unsecured Public Notes 375,000 2.60% Sep. 2031 Total senior unsecured notes 850,000 Total unsecured debt $ 1,706,118 (a) At March 31, 2022, a balance of $186.0 million was subject to the one-month Secured Overnight Financing Rate of 0.30%. The remaining balance includes $100 million CAD borrowings remeasured to $80.1 million USD, which was subject to the one-month Canadian Dollar Offered Rate of 0.96%. On January 28, 2022, we amended and restated the Revolving Credit Facility, upsizing the capacity to $1.0 billion, extending the maturity date to March 2026 and reducing the applicable margin to 0.850% per annum. On February 25, 2022, we repaid the $60.0 million 2022 Unsecured Term Loan with borrowings under our Revolving Credit Facility. As of March 31, 2022, we had $266.1 million outstanding on our Revolving Credit Facility. We have $733.9 million of remaining capacity on our Revolving Credit Facility as of March 31, 2022. Debt Covenants We are subject to various covenants and financial reporting requirements pursuant to our debt facilities, which are summarized below. As of March 31, 2022, we believe we were in compliance with all of our covenants on all outstanding borrowings. In the event of default, either through default on payments or breach of covenants, we may be restricted from paying dividends to our stockholders in excess of dividends required to maintain our REIT qualification. For each of the previous three years, we paid dividends out of our cash flows from operations in excess of the distribution amounts required to maintain our REIT qualification. 33 Covenants Requirements Leverage Ratio &#x2264; 0.60 to 1.00 Secured Indebtedness Ratio &#x2264; 0.40 to 1.00 Unencumbered Coverage Ratio &#x2265; 1.75 to 1.00 Fixed Charge Coverage Ratio &#x2265; 1.50 to 1.00 Total Unsecured Indebtedness to Total Unencumbered Eligible Property Value &#x2264; 0.60 to 1.00 Dividends and Other Restricted Payments Only applicable in case of default Aggregate Debt Ratio &#x2264; 0.60 to 1.00 Consolidated Income Available for Debt to Annual Debt Service Charge &#x2265; 1.50 to 1.00 Total Unencumbered Assets to Total Unsecured Debt &#x2265; 1.50 to 1.00 Secured Debt Ratio &#x2264; 0.40 to 1.00 Contractual Obligations The following table provides information with respect to our contractual commitments and obligations as of March 31, 2022 (in thousands). Refer to the discussion in the Liquidity and Capital Resources section above for further discussion over our short and long-term obligations. Year of Maturity Term Loans Revolving Credit Facility (a) Senior Notes Mortgages Interest Expense (b) Tenant Improvement Allowances Operating Leases Total Remainder of 2022 $ &#x2014; $ &#x2014; $ &#x2014; $ 2,180 $ 48,444 $ 57 $ 1,172 $ 51,853 2023 &#x2014; &#x2014; &#x2014; 7,582 64,123 &#x2014; 1,564 73,269 2024 190,000 &#x2014; &#x2014; 9,760 62,050 &#x2014; 1,613 263,423 2025 &#x2014; &#x2014; &#x2014; 20,195 58,612 &#x2014; 814 79,621 2026 400,000 266,118 &#x2014; 16,843 45,508 &#x2014; 847 729,316 Thereafter &#x2014; &#x2014; 850,000 39,874 99,781 &#x2014; 21 989,676 Total $ 590,000 $ 266,118 $ 850,000 $ 96,434 $ 378,518 $ 57 $ 6,031 $ 2,187,158 (a) The Revolving Credit Facility contains two six-month extension options subject to certain conditions, including the payment of an extension fee equal to 0.0625% of the revolving commitments. (b) Interest expense is projected based on the outstanding borrowings and interest rates in effect as of March 31, 2022. This amount includes the impact of interest rate swap agreements. At March 31, 2022 investment in rental property of $160.6 million was pledged as collateral against our mortgages. Additionally, we are a party to three separate tax protection agreements with the contributing members of three distinct UPREIT transactions and we entered into the Founding Owners' Tax Protection Agreement in connection with the Internalization. The tax protection agreements require us to indemnify the beneficiaries in the event of a sale, exchange, transfer, or other disposal of the contributed property, and in the case of the Founding Owners' Tax Protection Agreement, the entire Company, in a taxable transaction that would cause such beneficiaries to recognize a gain that is protected under the agreements, subject to certain exceptions. Based on values as of March 31, 2022, taxable sales of the applicable properties would trigger liability under the four agreements of approximately $22.3 million. Based on information available, we do not believe that the events resulting in damages as detailed above have occurred or are likely to occur in the foreseeable future. Accordingly, we have excluded these commitments from the contractual commitments table above. In the normal course of business, we enter into various types of commitments to purchase real estate properties. These commitments are generally subject to our customary due diligence process and, accordingly, a number of specific conditions must be met before we are obligated to purchase the properties. Derivative Instruments and Hedging Activities We are exposed to interest rate risk arising from changes in interest rates on the floating-rate borrowings under our unsecured credit facilities and a certain mortgage. Borrowings pursuant to our unsecured credit facilities bear interest at floating rates based on LIBOR plus an applicable margin. Accordingly, fluctuations in market interest rates may increase or decrease our interest expense, which will in turn, increase or decrease our net income and cash flow. We attempt to manage our interest rate risk by entering into interest rate swaps. As of March 31, 2022, we had 28 interest rate swaps outstanding in an aggregate notional amount of $720.1 million. Under these agreements, we receive monthly payments from the counterparties equal to the related variable interest rates multiplied by the outstanding notional amounts. In turn, we pay the counterparties each month an amount equal to a fixed interest rate multiplied by the related outstanding notional amounts. The intended net impact of these transactions is that we pay a fixed interest rate on our variable-rate borrowings. The interest rate swaps have been designated by us as cash flow hedges for accounting purposes and are reported at fair value. We assess, both at inception and on an 34 ongoing basis, the effectiveness of our qualifying cash flow hedges. We have not entered, and do not intend to enter, into derivative or interest rate transactions for speculative purposes. In addition, we own investments in Canada, and as a result are subject to risk from the effects of exchange rate movements in the Canadian dollar, which may affect future costs and cash flows. We funded a significant portion of our Canadian investments through Canadian dollar borrowings under our Revolving Credit Facility, which is intended to act as a natural hedge against our Canadian dollar investments. The Canadian dollar revolving borrowings are remeasured each reporting period, with the unrealized foreign currency gains and losses flowing through earnings. These unrealized foreign currency gains and losses do not impact our cash flows from operations until settled, and are expected to directly offset the changes in the value of our net investments as a result of changes in the Canadian dollar. Our Canadian investments are recorded at their historical exchange rates, and therefore are not impacted by changes in the value of the Canadian dollar . Cash Flows Cash and cash equivalents and restricted cash totaled $65.5 million and $18.4 million at March 31, 2022 and March 31, 2021, respectively. The table below shows information concerning cash flows for the three months ended March 31, 2022 and 2021: For the Three Months Ended March 31, March 31, (In thousands) 2022 2021 Net cash provided by operating activities $ 59,104 $ 51,780 Net cash provided by (used in) investing activities (207,678 ) (67,661 ) Net cash provided by (used in) financing activities 186,352 (76,497 ) Decrease in cash and cash equivalents and restricted cash $ 37,778 $ (92,378 ) The increase in net cash provided by operating activities during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, was mainly due to growth in our real estate portfolio. The increase in cash used in investing activities during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, was mainly due to increased acquisition volume and decreased disposition volume during the three months ended March 31, 2022. The change in net cash provided by (used in) financing activities during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, mainly reflects an increase proceeds from issuance of common stock under the ATM Program, and increased borrowings on the unsecured revolving credit facility. This change is slightly offset by increase in repayments of unsecured term loans and the unsecured revolving credit facility. Non-GAAP M easures FFO, Core FFO, and AFFO We compute Funds From Operations ("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, gains and losses from change in control, 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 Funds From Operations ("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, lease termination fees, the change in fair value of our earnout liability, cost of debt extinguishments, unrealized and realized gains or losses on foreign currency transactions, severance, 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 Adjusted Funds From Operations ("AFFO"), by adjusting Core FFO for certain non-cash revenues and expenses, including straight-line rents, amortization of lease intangibles, amortization of debt issuance costs, amortization of net mortgage premiums, (gain) loss on interest rate swaps and other non-cash interest expense, 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 35 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. In situations where we granted short-term rent deferrals as a result of the COVID-19 pandemic, and such deferrals were probable of collection and expected to be repaid within a short term, we continued to recognize the same amount of GAAP lease revenues each period. Consistent with GAAP lease revenues, the short-term deferrals associated with COVID-19, and the corresponding payments, did not impact our AFFO. 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 table reconciles net income (which is the most comparable GAAP measure) to FFO, Core FFO, and AFFO: For the Three Months Ended (in thousands, except per share data) March 31, 2022 December 31, 2021 March 31, 2021 Net income $ 28,441 $ 32,226 $ 23,960 Real property depreciation and amortization 34,259 33,451 30,690 Gain on sale of real estate (1,196 ) (3,732 ) (4,733 ) Provision for impairment on investment in rental properties &#x2014; 207 2,012 FFO $ 61,504 $ 62,152 $ 51,929 Net write-offs of accrued rental income 1,326 &#x2014; 442 Cost of debt extinguishment &#x2014; &#x2014; 126 Severance 120 29 1,243 Change in fair value of earnout liability &#x2014; &#x2014; (1,124 ) Other expenses (income) 1,126 (a) 51 (10 ) Core FFO $ 64,076 $ 62,232 $ 52,606 Straight-line rent adjustment (4,934 ) (5,321 ) (5,074 ) Adjustment to provision for credit losses &#x2014; (37 ) (1 ) Amortization of debt issuance costs 856 1,022 914 Amortization of net mortgage premiums (27 ) (26 ) (35 ) Loss (gain) on interest rate swaps and other non-cash interest expense 659 696 (41 ) Amortization of lease intangibles (1,158 ) (899 ) (728 ) Stock-based compensation 929 1,025 1,769 AFFO $ 60,401 $ 58,692 $ 49,410 (a) Amount includes $1.1 million of unrealized foreign exchange loss, primarily associated with our CAD denominated revolving borrowings. EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted 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 acquisition 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, 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 36 our lenders and rating agencies regarding our credit rating. As we fund new acquisitions using our unsecured Revolving Credit Facility, our leverage profile and Net Debt will be immediately impacted by current quarter acquisitions. However, the full benefit of EBITDAre from newly acquired properties 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 acquisitions 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 acquisitions 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 the change in fair value of our earnout liability, 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. We then annualize quarterly Adjusted EBITDAre by multiplying it by four ("Annualized 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. The following table reconciles net income (which is the most comparable GAAP measure) to EBITDA, EBITDAre, and Adjusted EBITDAre. Information is also presented with respect to Annualized EBITDAre and Annualized Adjusted EBITDAre: For the Three Months Ended (in thousands) March 31, 2022 December 31, 2021 March 31, 2021 Net income $ 28,441 $ 32,226 $ 23,960 Depreciation and amortization 34,290 33,476 30,713 Interest expense 16,896 16,997 16,108 Income taxes 412 457 413 EBITDA $ 80,039 $ 83,156 $ 71,194 Provision for impairment of investment in rental properties &#x2014; 207 2,012 Gain on sale of real estate (1,196 ) (3,732 ) (4,733 ) EBITDAre $ 78,843 $ 79,631 $ 68,473 Adjustment for current quarter acquisition activity (a) 3,225 2,002 1,365 Adjustment for current quarter disposition activity (b) (79 ) (180 ) (278 ) Adjustment to exclude non-recurring and other expenses (c) &#x2014; &#x2014; 2,100 Adjustment to exclude change in fair value of earnout liability &#x2014; &#x2014; (1,124 ) Adjustment exclude net write-offs of accrued rental income 1,326 &#x2014; 442 Adjustment to exclude realized / unrealized foreign exchange loss 1,125 &#x2014; &#x2014; Adjustment to exclude cost of debt extinguishments &#x2014; &#x2014; 126 Adjusted EBITDAre $ 84,440 $ 81,453 $ 71,104 Annualized EBITDAre $ 315,375 $ 318,526 $ 273,888 Annualized Adjusted EBITDAre $ 337,759 $ 325,812 $ 284,414 (a) Reflects an adjustment to give effect to all acquisitions during the quarter as if they had been acquired as of the beginning of the quarter. (b) 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. (c) Amounts include $1.2 million of severance and $0.9 million of accelerated stock-based compensation associated with the departure of executive officers during the three months ended March 31, 2021. Net Debt, Net Debt to Annualized EBITDAre and Net Debt to Annualized Adjusted EBITDAre We define Net Debt as gross debt (total reported debt plus debt issuance costs) 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, and is used in communications with lenders and rating agencies regarding our credit rating. The following table reconciles total debt (which is the most comparable GAAP measure) to Net Debt, and presents the ratio of Net Debt to Annualized EBITDAre and Net Debt to Annualized Adjusted EBITDAre, respectively: 37 (in thousands) March 31, 2022 December 31, 2021 March 31, 2021 Debt Unsecured revolving credit facility $ 266,118 $ 102,000 $ 15,000 Unsecured term loans, net 586,884 646,671 910,732 Senior unsecured notes, net 843,990 843,801 472,551 Mortgages, net 96,141 96,846 106,559 Debt issuance costs 9,419 9,842 6,988 Gross Debt 1,802,552 1,699,160 1,511,830 Cash and cash equivalents (54,103 ) (21,669 ) (10,205 ) Restricted cash (11,444 ) (6,100 ) (8,145 ) Net Debt $ 1,737,005 $ 1,671,391 $ 1,493,480 Net Debt to Annualized EBITDAre 5.51x 5.25x 5.45x Net Debt to Annualized Adjusted EBITDAre 5.14x 5.13x 5.25x Critical Accoun ting Policies and Estimates This Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses as well as other disclosures in the financial statements. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. These judgments affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, management evaluates its estimates and assumptions; however, actual results may differ from these estimates and assumptions, which in turn could have a material impact on our financial statements. A summary of our significant accounting policies and procedures are included in Note 2, "Summary of Significant Accounting Policies," in the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. We believe there have been no significant changes during the three months ended March 31, 2022, to the items that we disclosed as our critical accounting policies and estimates in our 2021 Annual Report on Form 10-K. Impact of Recent Accou nting Pronouncements For information on the impact of recent accounting pronouncements on our business, see Note 2 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Item 3. Quantitative and Qualitat ive Disclosures About Market Risk Interest Rate Risk We are exposed to certain market risks, one of the most predominant of which is a change in interest rates. Increases in interest rates can result in increased interest expense under our Revolving Credit Facility and other variable-rate debt. Increases in interest rates can also result in increased interest expense when our fixed rate debt matures and needs to be refinanced. We attempt to manage interest rate risk by entering into long-term fixed rate debt or by entering into interest rate swaps to convert certain variable-rate debt to a fixed rate. The interest rate swaps have been designated by us as cash flow hedges for accounting purposes and are reported at fair value. We have not entered, and do not intend to enter, into derivative or interest rate transactions for speculative purposes. Further information concerning our interest rate swaps can be found in Note 9 in our Condensed Consolidated Financial Statements contained elsewhere in this Quarterly Report on Form 10-Q. Our fixed-rate debt includes our Senior Unsecured Notes, mortgages, and variable-rate debt converted to a fixed rate with the use of interest rate swaps. Our fixed-rate debt had a carrying value and fair value of approximately $1.7 billion and $1.6 billion, respectively, as of March 31, 2022. Changes in market interest rates impact the fair value of our fixed-rate debt, but they have no impact on interest incurred or on cash flows. For instance, if interest rates were to increase 1%, and the fixed-rate debt balance were to remain constant, we would expect the fair value of our debt to decrease, similar to how the price of a bond decreases as interest rates rise. A 1% increase in market interest rates would have resulted in a decrease in the fair value of our fixed-rate debt of approximately $90.7 million as of March 31, 2022. 38 Borrowings pursuant to our Revolving Credit Facility and other variable-rate debt bear interest at rates based on the applicable reference rate plus an applicable margin, and totaled $863.6 million as of March 31, 2022, of which $720.1 million was swapped to a fixed rate by our use of interest rate swaps. Taking into account the effect of our interest rate swaps, a 1% increase or decrease in interest would have a corresponding $1.4 million increase or decrease in interest expense annually. With the exception of our interest rate swap transactions, we have not engaged in transactions in derivative financial instruments or derivative commodity instruments. Foreign Currency Exchange Rate Risk We own investments in Canada, and as a result are subject to risk from the effects of exchange rate movements in the Canadian dollar, which may affect future costs and cash flows. We funded a significant portion of our Canadian investments through Canadian dollar borrowings under our Revolving Credit Facility, which is intended to act as a natural hedge against our Canadian dollar investments. To the extent that currency fluctuations increase or decrease rental revenues, as translated to U.S. dollars, the change in debt service (comprised of interest payments), as translated to U.S. dollars, will partially offset the effect of fluctuations in revenue and, to some extent, mitigate the risk from changes in foreign currency exchange rates. We believe the foreign currency exchange rate risk on the remaining cash flows is immaterial. Additionally, our Canadian dollar revolving borrowings are remeasured each reporting period, with the unrealized foreign currency gains and losses flowing through earnings. These unrealized foreign currency gains and losses do not impact our cash flows from operations until settled, and are expected to directly offset the changes in the value of our net investments as a result of changes in the Canadian dollar. Our Canadian investments are recorded at their historical exchange rates, and therefore are not impacted by changes in the value of the Canadian dollar. Item 4. Control s and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of and for the quarter ended March 31, 2022, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective and were operating at a reasonable assurance level. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 39 Part II &#x2013; OTH ER INFORMATION Item 1. Legal Proceedings. From time to time, we are subject to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of our business. We are not currently a party to legal proceedings that we believe would reasonably be expected to have material adverse effect on our business, financial condition, or results of operations. We are not aware of any material legal proceedings to which we or any of our subsidiaries are a party or to which any of our property is subject, nor are we aware of any such legal proceedings contemplated by government agencies. Item 1A. Ris k Factors. There have been no material changes from the risk factors set forth in our 2021 Annual Report on Form 10-K for the year ended December 31, 2021. Item 2. Unregistered Sales of Equit y Securities and Use of Proceeds from Registered Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Saf ety Disclosures. Not applicable. Item 5. Other Information. None. 40 Item 6. E xhibits No. Description 3.1 Articles of Incorporation of Broadstone Net Lease, Inc. (filed as Exhibit 3.1 to the Corporation's Registration Statement on Form 10 filed April 24, 2017 and incorporated herein by reference) 3.2 Articles of Amendment of Broadstone Net Lease, Inc. (filed as Exhibit 3.1 to the Corporation's Current Report on Form 8-K filed September 18, 2020 and incorporated herein by reference) 3.3 Articles Supplementary of Broadstone Net Lease, Inc. (filed as Exhibit 3.2 to the Corporation's Current Report on Form 8-K filed September 18, 2020 and incorporated herein by reference) 3.4 Articles of Amendment of Broadstone Net Lease, Inc. (filed as Exhibit 3.3 to the Corporation's Current Report on Form 8-K filed September 18, 2020 and incorporated herein by reference) 3.5 Second Amended and Restated Bylaws of Broadstone Net Lease, Inc., adopted March 23, 2020 (filed as Exhibit 3.1 to the Corporation's Current Report on Form 8-K filed March 25, 2020 and incorporated herein by reference) 4.1 Indenture, dated as of September 15, 2021, among the Issuer, the Company and the Trustee, including the form of the Guarantee (filed as Exhibit 4.1 to the Corporation's Current Report on Form 8-K filed September 10, 2021 and incorporated herein by reference) 4.2 First Supplemental Indenture, dated as of September 15, 2021, among the Issuer, the Company and the Trustee, including the form of the Notes (filed as Exhibit 4.2 to the Corporation's Current Report on Form 8-K filed September 10, 2021 and incorporated herein by reference) 10.1 Amended and Restated Revolving Credit Agreement, dated as of January 28, 2022, by and among the Company, Broadstone Net Lease, LLC (the "Operating Company"), as the borrower, JPMorgan Chase Bank, N.A., and the other parties thereto (filed as Exhibit 10.1 to the Corporation's Current Report on Form 8-K filed February 3, 2022 and incorporated herein by reference) 10.2 Guaranty, dated January 28, 2022, by Broadstone Net Lease, Inc. in favor of JPMorgan Chase Bank, N.A. (filed as Exhibit 10.2 to the Corporation's Current Report on Form 8-K filed February 3, 2022 and incorporated herein by reference) 10.3* Fourth Amendment to Revolving Credit and Term Loan Agreement, dated as of March 31, 2022, by and among Broadstone Net Lease, Inc., Broadstone Net Lease, LLC, Manufacturers and Traders Trust Company, and other parties thereto 10.4* Fourth Amendment to Capital One Term Loan Agreement, dated March 31, 2022, by and among Broadstone Net Lease, Inc., Broadstone Net Lease, Capital One, National Association, and the other parties thereto 31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1*† Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2*† Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document &#x2013; the instance document does not appear in Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. † In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference. 41 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BROADSTONE NET LEASE, INC. Date: May 4, 2022 /s/ Christopher J. Czarnecki Christopher J. Czarnecki Chief Executive Officer and President Date: May 4, 2022 /s/ Ryan M. Albano Ryan M. Albano Executive Vice President and Chief Financial Officer 42