Broadstone Net Lease, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Contents Report of Independent Registered Accounting Firm (PCAOB ID No. 34 ) 82 Consolidated Balance Sheets 85 Consolidated Statements of Income and Comprehensive Income 86 Consolidated Statements of Stockholders’ Equity and Mezzanine Equity 8 8 Consolidated Statements of Cash Flows 89 Notes to Consolidated Financial Statements 90 Schedule III – Real Estate Assets and Accumulated Depreciation 136 81 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Broadstone Net Lease, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Broadstone Net Lease, Inc. and Subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of income and comprehensive income, stockholders’ equity and mezzanine equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 82 Table of Contents Investment in rental property — Refer to Notes 2 and 5 to the financial statements Critical Audit Matter Description During the year ended December 31, 2021, the Company acquired $659.2 million of real estate, excluding capitalized acquisition costs. The Company accounts for acquisitions of real estate as asset acquisitions. For acquired properties accounted for using the operating method, the Company allocates the purchase price to the tangible and intangible assets acquired and liabilities assumed of based on their relative fair value. Acquisition costs are capitalized and included with the allocated purchase price. The Company uses multiple sources to estimate fair value. Factors that impact estimates of fair value include real estate market conditions, industry conditions that the tenant operates in, and characteristics of the real estate and/or real estate appraisals. We identified the allocation of purchase price as a critical audit matter because of management’s significant estimates utilized to estimate the relative fair value of tangible and intangible assets acquired and liabilities assumed. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the allocation of purchase price for investments in rental property accounted for using the operating method included the following, among others: • We obtained an understanding and tested the design and operating effectiveness over the Company’s controls to allocate the purchase price of investments in real estate, including controls over management’s evaluation of inputs and assumptions used in the valuation estimates. • For each acquisition, we obtained and evaluated the third-party purchase price allocation report, along with relevant supporting documentation, such as the executed purchase and sale agreement. • For each real estate acquisition, we compared the purchase price allocated to identifiable tangible and intangible assets and liabilities as to the Company’s historical allocation percentages for similar types of properties, identifying outliers for further investigation. • With the assistance of our fair value specialists, on a sample basis, we evaluated the reasonableness of the valuation methodology and significant assumptions used in the third-party purchase price allocation report, including comparing the key inputs used in the purchase price allocation to external market sources. Evaluation of long-lived asset impairment —Refer to Note 2 to the consolidated financial statements Critical Audit Matter Description The Company’s evaluation of long-lived assets to be held and used for possible impairment involves an initial assessment to determine whether events or changes in circumstances indicate that their carrying amounts may not be recoverable. If, and when, such events or changes in circumstances area 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 and its eventual disposition. An impairment loss is measured as the amount by which the carrying amount of the long-lived asset or asset group exceeds its estimated fair value. We identified the evaluation of long-lived asset impairment as a critical audit matter because of the significant estimates and assumptions management utilizes to identify whether events or changes in circumstances have occurred indicating that the carrying value of the long-lived asset may not be recoverable, and, when applicable, the significant estimates and assumptions utilized to evaluate the long-lived asset for recoverability, including probabilities of outcomes, estimates of the hold or sell strategy, projected rental rates, and estimated disposition proceeds. Auditing these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort. 83 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the significant estimates and assumptions utilized by management to identify whether events or changes in circumstances have occurred indicating that the carrying value of the long-lived asset may not be recoverable and, when applicable, the significant estimates and assumptions utilized to evaluate the long-lived asset for recoverability included the following, among others: • We obtained an understanding and tested the design and operating effectiveness of the Company’s controls to monitor long-lived assets for events or changes in circumstances that indicate that their carrying amounts may not be recoverable, and, when applicable, the Company’s controls over the undiscounted cash flow recoverability estimates, including the estimated hold or sell strategy, projected rental rates, and estimated disposition proceeds. • We evaluated the completeness and reasonableness of the Company’s criteria to identify long-lived assets with indicators of impairment, including assessing the methodologies applied and testing the completeness and accuracy of the underlying data utilized. • We compared the Company’s undiscounted cash flow recoverability estimates and assumptions, including estimated hold or sell strategy, projected rental rates and estimated disposition proceeds to historical results and external market sources to evaluate the reasonableness. In addition, we performed procedures to evaluate the completeness and accuracy of the data utilized in management’s recoverability estimates. /s/ Deloitte & Touche LLP Rochester, New York February 23, 2022 We have served as the Company’s auditor since 2016. 84 Table of Contents Broadstone Net Lease, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except per share amounts) December 31, 2021 2020 Assets Accounted for using the operating method: Land $ 655,374 $ 555,748 Land improvements 295,329 279,360 Buildings and improvements 3,242,618 2,857,510 Equipment 11,870 11,870 Total accounted for using the operating method 4,205,191 3,704,488 Less accumulated depreciation ( 430,141 ) ( 349,977 ) Accounted for using the operating method, net 3,775,050 3,354,511 Accounted for using the direct financing method 28,782 29,066 Accounted for using the sales-type method 571 567 Investment in rental property, net 3,804,403 3,384,144 Cash and cash equivalents 21,669 100,486 Accrued rental income 116,874 102,117 Tenant and other receivables, net 1,310 1,604 Prepaid expenses and other assets 17,275 22,277 Goodwill 339,769 339,769 Intangible lease assets, net 303,642 290,913 Debt issuance costs—unsecured revolving credit facility, net 4,065 6,435 Leasing fees, net 9,641 10,738 Total assets $ 4,618,648 $ 4,258,483 Liabilities and equity Unsecured revolving credit facility $ 102,000 $ — Mortgages, net 96,846 107,382 Unsecured term loans, net 646,671 961,330 Senior unsecured notes, net 843,801 472,466 Interest rate swap, liabilities 27,171 72,103 Earnout liability — 7,509 Accounts payable and other liabilities 38,038 35,684 Dividends payable 45,914 39,252 Accrued interest payable 6,473 4,023 Intangible lease liabilities, net 70,596 79,653 Total liabilities 1,877,510 1,779,402 Commitments and contingencies (See Note 19) Equity Broadstone Net Lease, Inc. stockholders’ equity: Preferred stock, $ 0.001 par value; 20,000 shares authorized, no shares issued or outstanding — — Common stock, $ 0.00025 par value; 500,000 shares authorized, 162,383 shares issued and outstanding at December 31, 2021; 440,000 shares authorized, 108,609 shares issued and outstanding at December 31, 2020 41 27 Class A common stock, $ 0.00025 par value; no shares authorized, issued or outstanding at December 31, 2021; 60,000 shares authorized, 37,000 shares issued and outstanding at December 31, 2020 — 9 Additional paid-in capital 2,924,168 2,624,997 Cumulative distributions in excess of retained earnings ( 318,476 ) ( 259,673 ) Accumulated other comprehensive loss ( 28,441 ) ( 66,255 ) Total Broadstone Net Lease, Inc. stockholders’ equity 2,577,292 2,299,105 Non-controlling interests 163,846 179,976 Total equity 2,741,138 2,479,081 Total liabilities and equity $ 4,618,648 $ 4,258,483 The accompanying notes are an integral part of these consolidated financial statements. 85 Table of Contents Broadstone Net Lease, Inc. and Subsidiaries Consolidated Statements of Income and Comprehensive Income (in thousands, except per share amounts) For the Year Ended December 31, 2021 2020 2019 Revenues Lease revenues, net $ 382,876 $ 321,637 $ 298,815 Operating expenses Depreciation and amortization 132,096 132,685 108,818 Property and operating expense 18,459 17,478 15,990 General and administrative 36,366 27,988 5,456 Provision for impairment of investment in rental properties 28,208 19,077 3,452 Asset management fees — 2,461 21,863 Property management fees — 1,275 8,256 Total operating expenses 215,129 200,964 163,835 Other income (expenses) Interest income 17 24 9 Interest expense ( 64,146 ) ( 76,138 ) ( 72,534 ) Cost of debt extinguishment ( 368 ) ( 417 ) ( 1,176 ) Gain on sale of real estate 13,523 14,985 29,914 Income taxes ( 1,644 ) ( 939 ) ( 2,415 ) Internalization expenses — ( 3,705 ) ( 3,658 ) Change in fair value of earnout liability ( 5,539 ) 1,800 — Other expenses ( 62 ) ( 7 ) ( 6 ) Net income 109,528 56,276 85,114 Net income attributable to non-controlling interests ( 7,102 ) ( 5,095 ) ( 5,720 ) Net income attributable to Broadstone Net Lease, Inc. $ 102,426 $ 51,181 $ 79,394 Weighted average number of common shares outstanding Basic 153,057 117,150 95,917 Diluted 163,970 128,799 102,865 Net earnings per share attributable to common stockholders Basic and diluted $ 0.67 $ 0.44 $ 0.83 Comprehensive income Net income $ 109,528 $ 56,276 $ 85,114 Other comprehensive income Change in fair value of interest rate swaps 39,353 ( 50,544 ) ( 37,372 ) Realized loss (gain) on interest rate swaps 698 ( 166 ) ( 205 ) Comprehensive income 149,579 5,566 47,537 Comprehensive income attributable to non-controlling interests ( 9,831 ) ( 554 ) ( 3,036 ) Comprehensive income attributable to Broadstone Net Lease, Inc. $ 139,748 $ 5,012 $ 44,501 The accompanying notes are an integral part of these consolidated financial statements. 86 Table of Contents Broadstone Net Lease, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Equity (in thousands, except per share amounts) Common Stock Class A Common Stock Additional Paid-in Capital Cumulative Distributions in Excess of Retained Earnings Accumulated Other Comprehensive Income (Loss) Non- controlling Interests Total Shareholders’ Equity Balance, January 1, 2021 $ 27 $ 9 $ 2,624,997 $ ( 259,673 ) $ ( 66,255 ) $ 179,976 $ 2,479,081 Net income — — — 102,426 — 7,102 109,528 Issuance of 13,910 shares of common stock 4 — 293,728 — — — 293,732 Issuance of 1,859 OP Units — — — — — — — Offering costs, discounts, and commissions — — ( 12,290 ) — — — ( 12,290 ) Stock-based compensation — — 4,701 — — — 4,701 Retirement of 64 shares of common stock — — ( 1,215 ) — — — ( 1,215 ) Forfeiture of seven shares of common stock — — ( 33 ) — — — ( 33 ) Conversion of 37,000 Class A common stock to 37,000 shares of common stock 9 ( 9 ) — — — — — Conversion of 886 OP Units to 886 shares of common stock — — 14,206 — — ( 14,206 ) — Conversion of 2,049 OP Units to 2,049 shares of common stock with a related party 1 — 32,761 — — ( 32,762 ) — Distributions declared ($ 1.025 per share and OP Unit) — — — ( 161,229 ) — ( 11,188 ) ( 172,417 ) Change in fair value of interest rate swap agreements — — — — 36,664 2,689 39,353 Realized loss on interest rate swap agreements — — — — 658 40 698 Adjustment to non-controlling interests — — ( 32,687 ) — 492 32,195 — Balance, December 31, 2021 $ 41 $ — $ 2,924,168 $ ( 318,476 ) $ ( 28,441 ) $ 163,846 $ 2,741,138 The accompanying notes are an integral part of these consolidated financial statements. 87 Table of Contents Broadstone Net Lease, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Equity and Mezzanine Equity (in thousands, except per share amounts) Common Stock Class A Common Stock Additional Paid-in Capital Cumulative Distributions in Excess of Retained Earnings Accumulated Other Comprehensive Income (Loss) Non- controlling Interests Total Shareholders’ Equity Mezzanine Equity Common Stock Mezzanine Equity Non- controlling Interests Total Mezzanine Equity Balance, January 1, 2019 $ 22 $ — $ 1,557,421 $ ( 155,150 ) $ 14,806 $ 111,821 $ 1,528,920 $ — $ — $ — Net income — — — 79,394 — 5,720 85,114 — — — Issuance of 18,560 shares of common stock 5 — 395,086 — — — 395,091 — — — Other offering costs — — ( 1,649 ) — — — ( 1,649 ) — — — Distributions declared ($ 1.318 per share and OP Unit) — — — ( 127,014 ) — ( 9,266 ) ( 136,280 ) — — — Change in fair value of interest rate swap agreements — — — — ( 34,701 ) ( 2,671 ) ( 37,372 ) — — — Realized gain on interest rate swap agreements — — — — ( 191 ) ( 14 ) ( 205 ) — — — Redemption of 1,668 shares of common stock ( 1 ) — ( 32,005 ) ( 2,593 ) — — ( 34,599 ) — — — Redemption of 941 shares of common stock with a related party — — ( 17,102 ) ( 2,898 ) — — ( 20,000 ) — — — Adjustment of non-controlling interests — — ( 5,816 ) — — 5,816 — — — — Balance, December 31, 2019 26 — 1,895,935 ( 208,261 ) ( 20,086 ) 111,406 1,779,020 — — — Cumulative effect of accounting change — — — ( 323 ) — — ( 323 ) — — — Net income — — — 51,181 — 3,647 54,828 — 1,448 1,448 Issuance of 659 shares of common stock and 3,124 shares of mezzanine equity common stock — — 6,795 — — — 6,795 66,376 — 66,376 Stock-based compensation — — 1,989 — — — 1,989 — — — Issuance of 37,000 shares of Class A common stock — 9 628,991 — — — 629,000 — — — Issuance of 5,278 mezzanine equity non-controlling interests — — — — — — — — 112,159 112,159 Offering costs, discounts, and commissions — — ( 40,750 ) — — — ( 40,750 ) — — — Adjustments to carrying value of mezzanine equity non- controlling interests — — ( 2,513 ) — — — ( 2,513 ) — 2,513 2,513 Reclassification of portion of earnout liability — — 11,380 — — 19,430 30,810 — — — Repurchase of two fractional shares of common stock — — ( 35 ) — — — ( 35 ) — — — Repurchase of five OP Units — — — — — ( 91 ) ( 91 ) — — — Conversion of 822 OP Units to 822 shares of common stock with a related party — — 15,631 — — ( 15,631 ) — — — — Distributions declared ($ 0.825 per share and OP Unit) — — — ( 102,270 ) — ( 7,423 ) ( 109,693 ) — ( 1,742 ) ( 1,742 ) Change in fair value of interest rate swap agreements — — — — ( 46,018 ) ( 2,850 ) ( 48,868 ) — ( 1,676 ) ( 1,676 ) Realized gain on interest rate swap agreements — — — — ( 151 ) ( 11 ) ( 162 ) — ( 4 ) ( 4 ) Reclassification of 3,124 shares of mezzanine equity common stock to 3,124 shares of common stock 1 — 66,375 — — — 66,376 ( 66,376 ) — ( 66,376 ) Reclassification of 5,278 mezzanine equity non-controlling interests to 5,278 non-controlling interests — — — — — 112,698 112,698 — ( 112,698 ) ( 112,698 ) Adjustment to non-controlling interests — — 41,199 — — ( 41,199 ) — — — — Balance, December 31, 2020 $ 27 $ 9 $ 2,624,997 $ ( 259,673 ) $ ( 66,255 ) $ 179,976 $ 2,479,081 $ — $ — $ — The accompanying notes are an integral part of these consolidated financial statements. 88 Table of Contents Broadstone Net Lease, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) For the Year Ended December 31, 2021 2020 2019 Operating activities Net income $ 109,528 $ 56,276 $ 85,114 Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: Depreciation and amortization including intangibles associated with investment in rental property 128,888 131,568 105,408 Provision for impairment of investment in rental properties 28,208 19,077 3,452 Amortization of debt issuance costs and original issuance discounts charged to interest expense 3,721 3,303 2,542 Stock-based compensation expense 4,669 1,989 — Straight-line rent, direct financing and sales-type lease adjustments ( 18,362 ) ( 19,817 ) ( 21,943 ) Cost of debt extinguishment 368 417 1,176 Gain on sale of real estate ( 13,523 ) ( 14,985 ) ( 29,914 ) Change in fair value of earnout liability 5,539 ( 1,800 ) — Cash paid for earnout liability ( 6,440 ) — — Settlement of interest rate swaps ( 5,580 ) — — Leasing fees paid ( 319 ) — ( 1,002 ) Adjustment to provision for credit losses ( 38 ) ( 148 ) — Other non-cash items 1,811 605 466 Changes in assets and liabilities, net of acquisition: Tenant and other receivables 776 ( 670 ) 92 Prepaid expenses and other assets 350 ( 3,868 ) ( 136 ) Accounts payable and other liabilities 2,891 6,652 8,286 Accrued interest payable 2,450 429 ( 6,183 ) Net cash provided by operating activities 244,937 179,028 147,358 Investing activities Acquisition of rental property accounted for using the operating method, net of mortgages assumed of $ 0 , $ 0 and $ 49,782 in 2021, 2020 and 2019, respectively ( 665,030 ) ( 94,808 ) ( 997,015 ) Acquisition of rental property accounted for using the sales-type method — ( 574 ) — Cash paid for Internalization — ( 30,861 ) — Capital expenditures and improvements ( 1,598 ) ( 10,806 ) ( 5,051 ) Proceeds from disposition of rental property, net 83,812 77,513 168,759 Change in deposits on investments in rental property 512 ( 700 ) 1,600 Net cash used in investing activities ( 582,304 ) ( 60,236 ) ( 831,707 ) Financing activities Proceeds from issuance of common stock and Class A common stock, net of $ 12,270 , $ 40,674 and $ 0 of offering costs, discounts, and commissions in 2021, 2020 and 2019, respectively 280,356 588,457 329,750 Redemptions of common stock — — ( 34,599 ) Redemptions of common stock with a related party — — ( 20,000 ) Repurchase of fractional shares of common stock and OP Units — ( 126 ) — Borrowings on mortgages, senior unsecured notes and unsecured term loans, net of mortgages assumed of $ 0 , $ 0 and $ 49,782 in 2021, 2020 and 2019, respectively 381,810 60,000 750,000 Principal payments on mortgages and unsecured term loans ( 332,874 ) ( 394,666 ) ( 316,940 ) Borrowings on unsecured revolving credit facility 356,600 192,000 434,100 Repayments on unsecured revolving credit facility ( 254,600 ) ( 389,300 ) ( 377,900 ) Cash distributions paid to stockholders ( 154,459 ) ( 71,532 ) ( 61,961 ) Cash distributions paid to non-controlling interests ( 11,302 ) ( 7,079 ) ( 9,248 ) Cash paid for earnout liability ( 6,608 ) — — Debt issuance and extinguishment costs paid ( 4,515 ) ( 6,129 ) ( 7,531 ) Net cash provided by (used in) financing activities 254,408 ( 28,375 ) 685,671 Net (decrease) increase in cash and cash equivalents and restricted cash ( 82,959 ) 90,417 1,322 Cash and cash equivalents and restricted cash at beginning of period 110,728 20,311 18,989 Cash and cash equivalents and restricted cash at end of period $ 27,769 $ 110,728 $ 20,311 Reconciliation of cash and cash equivalents and restricted cash Cash and cash equivalents at beginning of period $ 100,486 $ 12,455 $ 18,612 Restricted cash at beginning of period 10,242 7,856 377 Cash and cash equivalents and restricted cash at beginning of period $ 110,728 $ 20,311 $ 18,989 Cash and cash equivalents at end of period $ 21,669 $ 100,486 $ 12,455 Restricted cash at end of period 6,100 10,242 7,856 Cash and cash equivalents and restricted cash at end of period $ 27,769 $ 110,728 $ 20,311 The accompanying notes are an integral part of these consolidated financial statements. 89 Table of Contents Broadstone Net Lease, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2021, 2020, and 2019 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 December 31, 2021, the Corporation owned a diversified portfolio of 726 individual commercial properties with 725 properties located in 42 U.S. states and one property located in British Columbia, Canada. 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 remaining membership units in the OP (“OP Units”), which are referred to as non-controlling interests, are held by members who were issued OP Units pursuant to the Internalization (defined below) or in exchange for their interests in properties acquired by the OP. 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.” Prior to February 7, 2020, the Corporation was externally managed by Broadstone Real Estate, LLC (“BRE”) and Broadstone Asset Management, LLC (the “Asset Manager”) subject to the direction, oversight, and approval of the Company’s board of directors (the “Board of Directors”). The Asset Manager was a wholly owned subsidiary of BRE and all of the Corporation’s officers were employees of BRE. Accordingly, both BRE and the Asset Manager were related parties of the Company. Refer to Note 3 for further discussion concerning related parties and related party transactions. On February 7, 2020, the Corporation, the OP, BRE, and certain of their respective subsidiaries and affiliates, completed through a series of mergers (the “Mergers”) the internalization of the external management functions previously performed for the Corporation and the OP by BRE and the Asset Manager (such transactions, collectively, the “Internalization”). Upon consummation of the Internalization, the Company’s management team and corporate staff, who were previously employed by BRE, became employees of an indirect subsidiary of the OP and the Company became internally managed. Upon Internalization, the prior Property Management Agreement and Asset Management Agreement were terminated. The Internalization was not considered a “Termination Event” under the terms of either agreement and therefore no fees were paid under them as a result of the Internalization. On September 18, 2020, the Corporation effected a four-for-one stock split on its then outstanding 26,943,587 shares of common stock (“Common Stock”) that previously had a $ 0.001 par value. Concurrent with the stock split, the OP effected a four -for-one stock split of its outstanding OP Units. No fractional shares or OP Units were issued as a result of the stock split. All historic share and per share amounts in these Consolidated Financial Statements have been adjusted to give retroactive effect to the stock split. On September 21, 2020, the Corporation completed its initial public offering (“IPO”) and issued an aggregate of 37,000,000 shares of a new class of common stock, $ 0.00025 par value per share (“Class A Common Stock”) at $ 17.00 per share, which includes shares issued pursuant to the underwriters’ partial exercise of their over-allotment option on October 20, 2020, pursuant to a registration statement on Form S-11 (File No. 333-240381), as amended, under the Securities Act of 1933. Shares of Class A Common Stock were listed on the New York 90 Table of Contents Stock Exchange (“NYSE”) under the symbol “BNL.” 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.” See Note 14. The following table summarizes the outstanding equity and economic ownership interest of the Corporation and the OP: December 31, 2021 December 31, 2020 December 31, 2019 (in thousands) Shares of Common Stock OP Units Total Shares of Common Stock OP Units Total Shares of Common Stock OP Units Total Ownership interest 162,383 10,323 172,706 145,609 11,399 157,008 104,006 6,948 110,954 Percent Ownership of OP 94.0 % 6.0 % 100.0 % 92.7 % 7.3 % 100.0 % 93.7 % 6.3 % 100.0 % Refer to Note 16 for further discussion regarding the calculation of weighted average shares outstanding. 2. Summary of Significant Accounting Policies Principles of Consolidation The 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 Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Use of Estimates The preparation of 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 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. 91 Table of Contents Investment in Rental Property Rental property accounted for under operating leases is recorded at cost. Rental property accounted for under direct financing leases and sales-type leases are recorded at its net investment, which generally represents the cost of the property at the inception of the lease. The Company accounts for its acquisitions of real estate as asset acquisitions in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations , as substantially all of the fair value of the assets acquired are concentrated in a single identifiable asset or group of similar identifiable assets. The Company allocates the purchase price of investments in rental property accounted for as asset acquisitions based on the relative fair value of the assets acquired and liabilities assumed. These generally include tangible assets, consisting of land and land improvements, buildings and other improvements, and equipment, and identifiable intangible assets and liabilities, including the value of in-place leases and acquired above-market and below-market leases. Acquisition costs incurred in connection with investments in real estate accounted for as asset acquisitions are capitalized and included with the allocated purchase price. The results of operations of acquired properties are included in the Consolidated Statements of Income and Comprehensive Income from the respective date of acquisition. Estimated fair value determinations are based on management’s judgment, which considers various factors including real estate market conditions, industry conditions that the tenant operates in, and characteristics of the real estate and/or real estate appraisals. The estimated fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant. The as-if-vacant value is then allocated to land and land improvements, buildings, and equipment based on comparable sales and other relevant information with respect to the property as estimated by management. Specifically, the “if vacant” value of buildings and equipment is calculated using an income approach. Assumptions used in the income approach to value the buildings include: capitalization and discount rates, lease-up time, market rents, make ready costs, land value, and land improvement value. The estimated fair value of acquired in-place leases are the costs that the Company would have had to incur to lease the properties to the occupancy level of the properties at the date of acquisition. Such costs include the fair value of leasing commissions and other operating costs that would have been incurred to lease the properties, had they been vacant, to their acquired occupancy level. Acquired in-place leases as of the date of acquisition are amortized over the remaining non-cancellable lease terms of the respective leases to amortization expense. Acquired above-market and below-market lease values are recorded based on the present value (using an interest rate that reflects the risks associated with the lease acquired) of the differences between the contractual amounts to be paid pursuant to the in-place leases and management’s estimate of fair market value lease rates at the time of acquisition for the corresponding in-place leases. The capitalized above-market and below-market lease values are amortized as adjustments to lease revenue over the remaining term of the respective leases. Should a tenant terminate its lease, the unamortized portion of the in-place lease value is charged to amortization expense and the unamortized portion of above-market or below-market lease value is charged to lease revenue. Management estimates the fair value of assumed mortgages payable based upon indications of then-current market pricing for similar types of debt with similar maturities. Assumed mortgages are initially recorded at their estimated fair value as of the assumption date, and the difference between such estimated fair value and the notes’ outstanding principal balance is amortized to interest expense over the remaining term of the debt. Expenditures for significant betterments and improvements are capitalized. Maintenance and repairs are charged to expense when incurred. Construction and improvement costs incurred in connection with the development of 92 Table of Contents new properties or the redevelopment of existing properties are capitalized. Real estate taxes, interest costs, and leasing and development costs incurred during construction periods are capitalized. Capitalization is based on qualified expenditures and interest rates. Capitalized real estate taxes, interest costs, and leasing and development costs are amortized over lives which are consistent with the related assets. There were no capitalized interest or real estate taxes during the years ended December 31, 2021, 2020, and 2019. 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 December 31, 2021, 2020, and 2019, 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. 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 charges, resulting primarily from changes in the Company’s long-term hold strategy with respect to the individual properties: For the Year Ended December 31, (in thousands, except number of properties) 2021 2020 2019 Number of properties 7 7 4 Impairment charge $ 28,208 $ 19,077 $ 3,452 During the year ended December 31, 2021, an office tenant of the Company executed an early lease termination at two properties in exchange for a fee of $ 35.0 million, and simultaneously sold the underlying properties to an unrelated third party for aggregate gross proceeds of $ 16.0 million. As the sale of the underlying properties was to an unrelated third party, the Company accounted for the lease termination income and sale of properties as separate transactions in accordance with GAAP. The Company recognized the termination fee income, net of $ 1.5 million write-off of accrued rental income associated with the lease as other income from real estate transactions, a component of Lease revenues, net, in the Consolidated Statements of Income and Comprehensive Income. Refer to the Lease Termination Fee Income accounting policy below for additional information on the Company’s accounting for lease terminations. As a 93 Table of Contents result of the early lease termination, the Company accelerated the amortization of the remaining lease intangibles, recognizing $ 0.3 million in Lease revenues, net and $ 4.0 million in Depreciation and amortization in the Consolidated Statements of Income and Comprehensive Income. The Company sold the underlying vacant properties for an aggregate sales price of $ 16.0 million, and incurred sales expenses of $ 0.7 million. The properties’ carrying value, net of the fully amortized lease intangibles, was $ 41.1 million, resulting in a $ 25.7 million loss on sale of the properties. As the lease termination income was recognized separate from the sale of the underlying properties, the $ 35.0 million cash receipt was not able to be factored into the properties’ future undiscounted cash flows, and the properties were immediately deemed impaired. As such, the Company recognized the loss as an impairment charge in the Consolidated Statements of Income and Comprehensive Income. The following summarizes the impact of the above transactions, together with the corresponding financial statement line item: (in thousands) Lease revenues, net Lease termination fee $ 35,000 Write-off of accrued rental income ( 1,496 ) Accelerated amortization of above-market and below-market lease intangibles 289 33,793 Depreciation and amortization Accelerated amortization of in-place lease intangible ( 4,046 ) Provision for impairment of investment in rental properties Loss on sale ( 25,746 ) Total impact to net income $ 4,001 The remaining impairments recognized during the year ended December 31, 2021 were immaterial. During the year ended December 31, 2020, impairment indicators primarily included changes in the Company’s long-term hold strategy with respect to the individual properties, which was due in part to unfavorable market trends resulting from the COVID-19 pandemic in geographic areas where the Company had vacant properties marketed for re-lease or sale. Impairments recognized during the year ended December 31, 2019 were immaterial. Lease Termination Fee Income The Company recognizes lease termination fee income as other income from real estate transactions, a component of Lease revenues, net, when all conditions of the termination agreement have been met, and collection of the lease termination fee is probable. If the tenant immediately vacates the property upon satisfying the conditions of the termination agreement, the Company recognizes the lease termination fee income net of accrued rental income associated with the lease immediately, as other income from real estate transactions, a component of Lease revenues, net, in the Consolidated Statement of Income and Comprehensive Income. Investments in Rental Property Held for Sale The Company classifies investments in rental property as held for sale when all of the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of investment properties, (iii) an active program to locate a buyer and conduct other actions required to complete the sale has been initiated, (iv) the sale of the property is probable in occurrence and is expected to qualify as a completed sale, (v) the property is actively marketed for sale at a sale price that is reasonable in relation to its fair value, and (vi) actions 94 Table of Contents required to complete the sale indicate that it is unlikely that any significant changes will be made or that the plan to sell will be withdrawn. For properties classified as held for sale, the Company suspends depreciation and amortization of the related assets, including the acquired in-place lease and above- or below-market lease intangibles, as well as straight-line revenue recognition of the associated lease, and records the investment in rental property at the lower of cost or net realizable value. The assets and liabilities associated with the properties classified as held for sale are presented separately on the Consolidated Balance Sheets for the most recent reporting period. At December 31, 2021 and 2020, the Company did not have any properties that met the held for sale criteria. Sales of Real Estate Under ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets the Company’s sales of real estate are generally considered to be sales to non-customers, requiring the Company to identify each distinct non-financial asset promised to the buyer. The Company determines whether the buyer obtains control of the non-financial assets, achieved through the transfer of the risks and rewards of ownership of the non-financial assets. If control is transferred to the buyer, the Company derecognizes the asset. If the Company determines that it did not transfer control of the non-financial assets to the buyer, the Company analyzes the contract for separate performance obligations and allocates a portion of the sales price to each performance obligation. As performance obligations are satisfied, the Company recognizes the respective income in the Consolidated Statements of Income and Comprehensive Income. The Company presents discontinued operations if disposals of properties represent a strategic shift in operations. Those strategic shifts would need to have a major effect on the Company’s operations and financial results in order to meet the definition. For the years ended December 31, 2021, 2020, and 2019, the Company did not have property dispositions that qualified as discontinued operations. Depreciation Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which are as follows: Land improvements 15 years Buildings and improvements 15 to 39 years Equipment 7 years Leasing Fees Leasing fees represent costs incurred to lease properties to tenants and are capitalized as they are incremental costs of a lease that would not have been incurred if the lease had not been obtained. Leasing fees are amortized using the straight-line method over the term of the lease to which they relate, which range from 4 to 25 years. Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity at date of acquisition of three months or less, including money market funds. The Company estimates that the fair value of cash equivalents approximates the carrying value due to the relatively short maturity of these instruments. 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 95 Table of Contents Code of 1986, as amended (the “Code”), and is reported within Prepaid expenses and other assets on the Consolidated Balance Sheets. Restricted cash consisted of the following: December 31, (in thousands) 2021 2020 Escrow funds and other $ 6,100 $ 7,852 Undistributed 1031 proceeds — 2,390 $ 6,100 $ 10,242 Revenue Recognition The Company accounts for leases in accordance with ASC 842, Leases . The Company commences revenue recognition on its leases based on a number of factors, including the initial determination that the contract is or contains a lease. Generally, all of the Company’s property related contracts are or contain leases, and therefore revenue is recognized when the lessee takes possession of or controls the physical use of the leased assets. In most instances this occurs on the lease commencement date. At the time of lease assumption or at the inception of a new lease, including new leases that arise from amendments, the Company assesses the terms and conditions of the lease to determine the proper lease classification. Certain of the Company’s leases require tenants to pay rent based upon a percentage of the property’s net sales (“percentage rent”) or contain rent escalators indexed to future changes in the Consumer Price Index (“CPI”). Lease income associated with such provisions, absent the existence of a floor, are considered variable lease income and are not included in the initial measurement of the lease receivable, or in the calculation of straight-line rent revenue. Such amounts are recognized as income when the amounts are determinable. A lease is classified as an operating lease if none of the following criteria are met: (i) ownership transfers to the lessee at the end of the lease term, (ii) the lessee has a purchase option that is reasonably expected to be exercised, (iii) the lease term is for a major part of the economic life of the leased property, (iv) the present value of the future lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the leased property, and (v) the leased property is of such a specialized nature that it is expected to have no future alternative use to the Company at the end of the lease term. Prospectively, upon adoption of ASC 842 on January 1, 2019, if one or more of these criteria are met, the lease will generally be classified as a sales-type lease, unless the lease contains a residual value guarantee from a third party other than the lessee, in which case it would be classified as a direct financing lease under certain circumstances. Prior to the adoption of ASC 842, a lease that was not an operating lease would be accounted for as a direct financing lease. The Company accounts for the right to use land as a separate lease component, unless the accounting effect of doing so would be insignificant. Determination of significance requires management judgment. In determining whether the accounting effect of separately reporting the land component from other components for its real estate leases is significant, the Company assesses: (i) whether separating the land component impacts the classification of any lease component, (ii) the value of the land component in the context of the overall contract, and (iii) whether the right to use the land is coterminous with the rights to use the other assets. Revenue recognition methods for operating leases, direct financing leases, and sales-type leases are described below: Rental property accounted for under operating leases —Revenue is recognized as rents are earned on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable rent escalations and collectability of the lease payments is probable, the difference between such 96 Table of Contents rental income earned and the cash rent due under the provisions of the lease is recorded as Accrued rental income on the Consolidated Balance Sheets. If the Company determines that collectability of the lease payments is not probable, the Company records an adjustment to Lease revenues, net to reduce cumulative income recognized since lease commencement to the amount of cash collected from the lessee. Future revenue recognition is limited to amounts paid by the lessee. Rental property accounted for under direct financing leases —The Company utilizes the direct finance method of accounting to record direct financing lease income. The net investment in the direct financing lease represents receivables for the sum of future lease payments to be received and the estimated residual value of the leased property, less unamortized unearned income (which represents the difference between undiscounted cash flows and discounted cash flows). Unearned income is deferred and amortized into income over the lease terms so as to produce a constant periodic rate of return on the Company’s net investment in the leases. Rental property accounted for under sales-type leases —For leases accounted for as sales-type leases, the Company records selling profit arising from the lease at inception, along with the net investment in the lease. The Company leases assets through the assumption of existing leases or through sale-leaseback transactions, and records such assets at their fair value at the time of acquisition, which in most cases coincides with lease inception. As a result, the Company does not generally recognize selling profit on sales-type leases. The net investment in the sales-type lease represents receivables for the sum of future lease payments and the estimated unguaranteed residual value of the leased property, each measured at net present value. Interest income is recorded over the lease terms so as to produce a constant periodic rate of return on the Company’s net investment in the leases. Certain of the Company’s lease contracts contain nonlease components ( e.g. , charges for management fees, common area maintenance, and reimbursement of third-party maintenance expenses) in addition to lease components ( i.e. , monthly rental charges). Services related to nonlease components are provided over the same period of time as, and billed in the same manner as, monthly rental charges. The Company elected to apply the practical expedient available under ASC 842, for all classes of assets, not to separate the lease components from the nonlease components when accounting for operating leases. Since the lease component is the predominant component under each of these leases, combined revenues from both the lease and nonlease components are reported as Lease revenues, net in the accompanying Consolidated Statements of Income and Comprehensive Income. In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) that focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under ASC 842, economic relief that was agreed to or negotiated outside of the original lease agreement is typically considered a lease modification, in which case both the lessee and lessor would be required to apply the respective modification frameworks. However, if the lessee was entitled to the economic relief because of either contractual or legal rights, the relief would be accounted for outside of the modification framework. Although the original lease modification guidance in ASC 842 remains appropriate to address routine lease modifications, the Lease Modification Q&A established a different framework to account for certain lease concessions granted in response to the COVID-19 pandemic, if certain criteria have been met. The Lease Modification Q&A allows the Company to make an accounting policy election to account for COVID-19 related lease concessions as either a lease modification or a negative variable adjustment to rental revenue. Such election is required to be applied consistently to leases with similar characteristics and similar circumstances. In accordance with elections made pursuant to the Lease Modification Q&A, straight-line revenue recognized in the financial statements was not impacted for partial rent deferrals that were expected to be repaid within a short period of time, and where there was not a substantial change to the total consideration in the original lease agreement. Deferred rents due under these agreements was recorded as Tenant and other receivables, net in the Consolidated Balance Sheets. 97 Table of Contents 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 Consolidated Balance Sheets. Rent received in advance consisted of the following: December 31, (in thousands) 2021 2020 Rent received in advance $ 15,162 $ 13,651 Goodwill Goodwill represents the excess of the amount paid over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and it assigned to one or more reporting units. The Company evaluates goodwill for impairment when an event occurs or circumstances change that indicate the carrying value may not be recoverable, or at least annually. The Company’s annual testing date is November 30. The goodwill impairment evaluation is completed using either a qualitative or quantitative approach. Under a qualitative approach, the impairment review for goodwill consists of an assessment of whether it is more-likely-than-not that the reporting unit’s fair value is less than its carrying value, including goodwill. If a qualitative approach indicates it is more likely-than-not that the estimated carrying value of a reporting unit (including goodwill) exceeds its fair value, or if we choose to bypass the qualitative approach, we perform the quantitative approach described below. When the Company performs a quantitative test of goodwill for impairment, it compares the carrying value of its reporting unit with its fair value. If the fair value of the reporting unit exceeds its carrying amount, the Company does not consider goodwill to be impaired and no further analysis would be required. If the fair value is determined to be less than its carrying value, the amount of goodwill impairment equals the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The Company determined that it has one reporting unit, consistent with its segment reporting analysis, which includes the acquisition, leasing, and ownership of net leased properties (i.e., the consolidated entity). When necessary to perform the quantitative test for goodwill impairment, the Company’s estimate of fair value is determined using a market approach, leveraging assumptions such as the fair value of our equity, and consideration of a control premium, if necessary, which includes an analysis of similar market transactions. While the Company believes the assumptions used to estimate the fair value of its reporting unit are reasonable, changes in these assumptions may have a material impact on the Company’s financial results. Based on the results of its annual goodwill impairment test on November 30, 2021 and 2020, the Company concluded that goodwill was not impaired. Provision for Uncollectible Rent In accordance with ASC 842, Leases , provisions for uncollectible rent are recorded as an offset to Lease revenues, net on the accompanying Consolidated Statements of Income and Comprehensive Income. The following table summarizes the changes in the provision for uncollectible rent: For the Year Ended December 31, (in thousands) 2021 2020 2019 Beginning balance $ 201 $ — $ 2,086 Provision for uncollectible rent, net ( 101 ) 2,073 441 Write-offs — ( 1,872 ) ( 2,527 ) Ending balance $ 100 $ 201 $ — 98 Table of Contents Tenant and Capital Reserves The terms of certain of the Company’s operating leases require the establishment of tenant and capital reserves. Under the tenant reserve requirements, tenant-funded amounts are deposited into an escrow account, to be used to fund certain costs to maintain the rental properties. Under the capital reserve lease requirements, the tenants are required to pay additional amounts into an escrow account to fund capital improvements, replacements, and repairs made to the properties. The Company has no obligation to fund capital improvements beyond these reserve balances. The balances of the tenant and capital reserves are included in Accounts payable and other liabilities on the Consolidated Balance Sheets and are as follows: December 31, (in thousands) 2021 2020 Tenant reserve $ 1,217 $ 1,070 Capital reserve 1,020 1,001 $ 2,237 $ 2,071 The corresponding cash balances are recorded in Prepaid expenses and other assets on the Consolidated Balance Sheets. Debt Issuance Costs In accordance with ASC 835, Interest, debt issuance costs related to mortgages, unsecured term loans and senior unsecured notes are reported as a direct deduction from the carrying amount of the related liability, consistent with debt discounts, in the Consolidated Balance Sheets. Debt issuance costs associated with the unsecured revolving credit facility are reported as an asset on the Consolidated Balance Sheets. Debt issuance costs incurred in connection with the Company’s unsecured revolving credit facility, mortgages, unsecured term loans and senior unsecured notes have been deferred and are being amortized over the term of the respective loan commitment using the straight-line method, which approximates the effective interest method. Offering Costs In connection with equity offerings, the Company incurs and capitalizes certain direct, incremental legal, professional, accounting and other third-party costs. Such costs are offset against the gross proceeds of each equity offering, and recorded as a component of Additional paid-in capital on the Consolidated Balance Sheets upon the consummation of the offering. See Note 14 for further discussion of net proceeds associated with equity offerings. Earnout Liability The Company’s earnout liability was payable in four tranches, in a combination of cash, common shares, and OP Units, in the same proportion as the initial consideration paid in the Internalization (see Note 4). The common shares and OP Units payable under the arrangement were originally subject to a redemption rights agreement, whereby holders of the common shares and OP Units had the right to require the Company to repurchase any or all of the common shares or OP Units if an IPO had not occurred on or before December 31, 2020 (see discussion of the redemption rights agreement in Note 4). The common shares and OP Units were deemed to be freestanding financial instruments that, at inception, embodied an obligation to repurchase the Company’s common shares and OP Units, and therefore were initially classified as liabilities together with the cash portion of the earnout, and recorded in Earnout liability on the Consolidated Balance Sheets as part of the purchase price allocation. 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 Consolidated Statements of Income and Comprehensive Income. 99 Table of Contents Upon completion of the IPO in September 2020, the redemption rights with respect to the common shares and OP Units terminated, and the $ 18.4 million fair value of the 725,988 shares of common stock and 1,239,506 OP Units associated with the third and fourth earnout tranches as of the date of the IPO, was reclassified to equity as a component of Additional paid-in capital and Non-controlling interests on the Consolidated Balance Sheets. At December 31, 2020, the $ 12.4 million fair value of 362,989 shares of common stock and 619,751 OP Units associated with the first and second earnout tranches was reclassified to equity as a component of Additional paid-in capital and Non-controlling interests on the Consolidated Balance Sheets, as the achievement of 2020 adjusted funds from operations (“AFFO”) targets were not met and were no longer applicable. The Company achieved all four milestones applicable to the earnout thereby triggering the payout of all earnout tranches during the year ended December 31, 2021, and therefore no remaining earnout liability was recorded at December 31, 2021. Mezzanine Equity The Company issued common shares and OP Units as base consideration for the Internalization, each of which were subject to a redemption rights agreement, where the common shares (“mezzanine equity common stock”) and OP Units (“mezzanine equity non-controlling interests”) were economically equivalent to the permanent equity classified common shares and OP Units. The Company presented the mezzanine equity common stock and mezzanine equity non-controlling interests as mezzanine equity in the Consolidated Balance Sheets as they were redeemable outside the Company’s control. The Company subsequently recorded mezzanine equity common stock at redemption value each reporting period, with changes in carrying value recorded as a component of Additional paid-in capital on the Consolidated Balance Sheets. The Company subsequently recorded mezzanine equity non-controlling interests at the greater of (i) carrying amount, increased or decreased for the non-controlling interests’ share of net income or loss, dividends and comprehensive income or loss or (ii) redemption value. Changes in carrying value of mezzanine equity non-controlling interests were recorded as a component of Additional paid-in capital on the Consolidated Balance Sheets. The rights under the redemption rights agreement terminated effective with the IPO and the applicable common shares and OP Units were reclassified to permanent equity in 2020 (see discussion of redemption rights agreement in Note 4). Derivative Instruments The Company uses interest rate swap agreements to manage risks related to interest rate movements. The interest rate swap agreements, designated and qualifying as cash flow hedges, are reported at fair value. ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting and Hedging Activities, requires a company to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. In accordance with ASU 2017-12, the gain or loss on the qualifying hedges is initially included as a component of other comprehensive income or loss and is subsequently reclassified into earnings when interest payments (the forecasted transactions) on the related debt are incurred and as the swap net settlements occur. When an existing cash flow hedge is terminated, the Company determines the accounting treatment for the accumulated gain or loss recognized in Accumulated other comprehensive loss based on the probability of the hedged forecasted transaction occurring within the period the cash flow hedge was anticipated to affect earnings. If the Company determines that the hedged forecasted transaction is probable of occurring during the original period, the accumulated gain or loss is reclassified into earnings over the remaining life of the cash flow hedge 100 Table of Contents using a straight-line method. If the Company determines that the hedged forecasted transaction is not probable of occurring during the original period, the entire amount of accumulated gain or loss is reclassified into earnings at such time. The Company documents its risk management strategy and hedge effectiveness at the inception of, and during the term of, each hedge. The Company’s interest rate risk management strategy is intended to stabilize cash flow requirements by maintaining interest rate swap agreements to convert certain variable-rate debt to a fixed rate. Property Loss and Insurance Recoveries Property losses, whether full or partial, are accounted for using a combination of impairment, insurance, and revenue recognition guidance prescribed by GAAP. Upon incurring a loss event, the Company evaluates for asset impairment under ASC 350, Intangibles—Goodwill and Other, and ASC 360, Property, Plant, and Equipment. Under the terms of the Company’s lease agreements with tenants, a majority of which are net leases (whereby the tenants are responsible for insurance, taxes, and maintenance, among other property costs), the tenants are responsible for repairs and maintenance to the properties. The terms of the leases generally also require the tenants to continue making their monthly rental payments despite the property loss. To the extent that the assets are recoverable, determined utilizing undiscounted cash flows expected to result from the use of the asset or asset group and its eventual disposition, the Company accounts for a full or partial property loss as an acceleration of depreciation and evaluates whether all or a portion of the property loss can be offset by the recognition of insurance recoveries. Under the terms of the lease agreements with tenants, in the case of full or partial loss to a property, the tenant has an obligation to restore/rebuild the premises as nearly as possible to its value, condition and character immediately prior to such event. To mitigate the risk of loss, the Company requires tenants to maintain general liability insurance policies on the replacement value of the properties. Based on these considerations, the Company follows the guidance in ASC 610-30, Other Income —Gains and Losses on Involuntary Conversions, for the conversion of nonmonetary assets ( i.e. , the properties) to monetary assets ( i.e. , insurance recoveries or tenant recoveries). Under ASC 610-30, once probable of receipt, the Company recognizes an insurance/tenant recovery receivable in Tenant and other receivables, net, in the Consolidated Balance Sheets, with a corresponding offset to the accelerated depreciation recognized in the Consolidated Statements of Income and Comprehensive Income. If the insurance/tenant recovery is less than the amount of accelerated depreciation recognized, the Company will recognize a net loss in the Consolidated Statements of Income and Comprehensive Income. If the insurance/tenant recovery is greater than the amount of accelerated depreciation recognized, the Company will only recognize a recovery up to the amount of the accelerated depreciation, and will account for the excess as a gain contingency in accordance with ASC 450-30, Gain Contingencies. Gain contingencies are recognized when earned and realized, which typically will occur at the time of final settlement or when non-refundable cash advances are received. Non-controlling Interests Non-controlling interests represents the membership interests held in the OP of 6.0 %, 7.3 %, and 6.3 % at December 31, 2021, 2020, and 2019, respectively, by third parties which are accounted for as a separate component of equity. The Company adjusts the carrying value of non-controlling interests to reflect their share of the book value of the OP. Such adjustments are recorded to Additional paid-in capital as a reallocation of Non-controlling interests in the Consolidated Statements of Stockholders’ Equity and Mezzanine Equity. 101 Table of Contents Segment Reporting The Company currently operates in a single reportable segment, which includes the acquisition, leasing, and ownership of net leased properties. The Company’s chief operating decision maker assesses, measures, and reviews the operating and financial results at the consolidated level for the entire portfolio, and therefore, each property or property type is not considered an individual operating segment. The Company does not evaluate the results of operations based on geography, size, or property type. Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1 —Quoted prices that are available in active markets for identical assets or liabilities. The types of financial instruments included in Level 1 are marketable, available-for-sale equity securities that are traded in an active exchange market. Level 2 —Pricing inputs other than quoted prices in active markets, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Instruments included in this category are derivative contracts whose value is determined using a pricing model with inputs (such as yield curves and credit spreads) that are observable in the market or can be derived principally from or corroborated by observable market data. Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 includes assets and liabilities whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. The Company has estimated that the carrying amount reported on the Consolidated Balance Sheets for Cash and cash equivalents, Prepaid expenses and other assets, Tenant and other receivables, net, Accrued interest payable, and Accounts payable and other liabilities, and Dividends payable approximates their fair values due to their short-term nature. Recurring Fair Value Measurements Interest Rate Swap Assets and Liabilities— The Company measures and records its interest rate swap instruments (see Note 11) and earnout liability at fair value, and discloses the fair value of its long-term debt, on a recurring basis. Interest rate swaps are derivative instruments that have no quoted readily available Level 1 inputs, and therefore are measured at fair value using inputs that are directly observable in active markets and are classified within Level 2 of the valuation hierarchy, using an income approach. Specifically, the fair value of the interest rate swaps is determined using a discounted cash flow analysis on the expected future cash flows of each instrument. This analysis utilizes observable market data including yield curves and implied volatilities to determine the market’s expectation of the future cash flows of the variable component. The fixed and variable components of the interest rate swaps are then discounted using calculated discount factors developed based on the overnight indexed swap (“OIS”) curve and are aggregated to arrive at a single valuation for the period. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Although the Company has 102 Table of Contents determined that the majority of the inputs used to value its interest rate swaps fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its interest rate swaps utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. At December 31, 2021 and 2020, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation. As a result, the Company has determined that its interest rate swap valuations in their entirety are appropriately classified within Level 2 of the fair value hierarchy. Earnout Liability —In connection with the Internalization, the Company recognized an earnout liability that was due and payable to the former owners of BRE if certain milestones were achieved during specified periods of time following the closing of the Internalization (the “Earnout Periods”). Under the terms of the agreement, the milestones related to either (a) the 40-day dollar volume-weighted average price of a share of the Company’s common stock (“VWAP per REIT Share”), following the completion of an IPO of the Company’s common stock, or (b) the Company’s AFFO per share, prior to the completion of an IPO. The Company utilized third-party valuation experts to assist in estimating the fair value of the earnout liability, and developed estimates by considering weighted-average probabilities of likely outcomes, and using a Monte Carlo simulation and discounted cash flow analysis. These estimates required the Company to make various assumptions about share price volatility and, prior to the IPO, about the timing of an IPO and net asset prices, each of which are unobservable and considered Level 3 inputs in the fair value hierarchy. A change in these inputs to a different amount could have resulted in a significantly higher or lower fair value measurement at the reporting date. Specifically, advancements in the estimated IPO date assumption increased the earnout liability’s fair value given the earnout’s fixed time horizon. Peer share price volatilities were used to estimate the Company’s expected share price volatility, and the Company’s corresponding ability to achieve the earnout targets. Increases in the volatility assumption would increase the earnout liability’s fair value. Increases in net asset values would also increase the earnout liability’s fair value. The Company achieved all four VWAP milestones applicable to the earnout thereby triggering the payout of all earnout tranches during the year ended December 31, 2021, and therefore no remaining earnout liability was recorded at December 31, 2021. The table below provides a summary of the significant unobservable inputs used to estimate the fair value of the earnout liability as of December 31, 2020: Significant Unobservable Inputs Weighted Average Assumption Used Range Peer stock price volatility 40.0 % 25.92 % - 55.90 % The table below provides a summary of the significant unobservable inputs used to estimate the fair value of the earnout liability as of February 7, 2020, which was the date of the Internalization: Significant Unobservable Inputs Weighted Average Assumption Used Range Expected IPO date April 15, 2020 March 2020 through May 2020 Peer stock price volatility 20.0 % 16.22 % to 23.09 % Company’s net asset value per diluted share $ 21.30 (a) (a) The Company’s net asset value per diluted share was primarily based on the fair value of its real estate investment portfolio, together with the fair value of its other assets and liabilities. The fair value of the Company’s real estate investment portfolio as of the measurement date was determined using market capitalization rates that ranged between 6.05 % and 7.09 %. 103 Table of Contents The following table presents a reconciliation of the change in the earnout liability: For the Year Ended December 31, (in thousands) 2021 2020 Beginning balance $ 7,509 $ — Allocation of Internalization purchase price at February 7, 2020 — 40,119 Change in fair value subsequent to Internalization 5,539 ( 1,800 ) Reclassification as a component of additional paid-in capital and non-controlling interests — ( 30,810 ) Payout of tranches earned ( 13,048 ) — Ending balance $ — $ 7,509 The balances of financial instruments measured at fair value on a recurring basis are as follows (see Note 11): December 31, 2021 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, liabilities $ ( 27,171 ) $ — $ ( 27,171 ) $ — December 31, 2020 Total Level 1 Level 2 Level 3 Interest rate swap, liabilities $ ( 72,103 ) $ — $ ( 72,103 ) $ — Earnout liability ( 7,509 ) — — ( 7,509 ) Long-term Debt —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 (defined below), 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 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: December 31, (in thousands) 2021 2020 Carrying amount $ 1,699,160 $ 1,547,667 Fair value 1,785,701 1,679,188 Non-recurring Fair Value Measurements The Company’s non-recurring fair value measurements at December 31, 2021 and 2020, consisted of the fair value of impaired real estate assets that were determined using Level 3 inputs. 104 Table of Contents Income Taxes The Company has made an election to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with its taxable year ended December 31, 2008. The Company believes it is organized and operates in such a manner as to qualify for treatment as a REIT, and intends to operate in the foreseeable future in such a manner so that it will remain qualified as a REIT for U.S. federal income tax purposes. Accordingly, the Company is not subject to U.S. federal corporate income tax to the extent its dividends paid deduction exceeds its taxable income, as defined in the Code. Accordingly, no provision has been made for U.S. federal income taxes in the accompanying Consolidated Financial Statements. The Company has a wholly-owned subsidiary that elected to be treated as a taxable REIT subsidiary (“TRS”) and is subject to U.S. federal, state and local income taxes at regular corporate tax rates when due. The Company is subject to state and local income or franchise taxes and foreign taxes in certain jurisdictions in which some of its properties are located and records these within Income taxes in the accompanying Consolidated Statements of Income and Comprehensive Income when due. The Company is required to file income tax returns with federal, state, and Canadian taxing authorities. At December 31, 2021, the Company’s U.S. federal and state income tax returns remain subject to examination by the respective taxing authorities for the 2018 through 2020 tax years. The Company recognizes and measures uncertain tax positions using a two-step approach. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more-likely-than-not that the position will be sustained upon examination, including resolution of related appeals or litigation processes, if any. In making this assessment, the Company must assume that the taxing authority will examine the income tax position and have full knowledge of all relevant information. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may or may not accurately forecast actual outcomes. The Company has determined that it has no uncertain tax positions at December 31, 2021 and 2020, or for the years ended December 31, 2021, 2020, and 2019, which include the tax status of the Company. Interest and penalties related to income taxes are charged to tax expense during the year in which they are incurred. Taxes Collected From Tenants and Remitted to Governmental Authorities A majority of the Company’s properties are leased on a net basis, which provides that the tenants are responsible for the payment of property operating expenses, including, but not limited to, property taxes, maintenance, insurance, repairs, and capital costs, during the lease term. The Company records such expenses on a net basis. In other situations, the Company may collect property taxes from its tenants and remit those taxes to governmental authorities. Taxes collected from tenants and remitted to governmental authorities are presented on a gross basis, where amounts billed to tenants are included in Lease revenues, net and the corresponding expense is included in Property and operating expense in the accompanying Consolidated Statements of Income and Comprehensive Income. Right-of-Use Assets and Lease Liabilities The Company is a lessee under non-cancelable operating leases associated with its corporate headquarters and other office spaces as well as with leases of land (“ground leases”). The Company records right-of-use assets and lease liabilities associated with these leases. The lease liability is equal to the net present value of the future 105 Table of Contents payments to be made under the lease, discounted using estimates based on observable market factors. The right-of-use asset is generally equal to the lease liability plus initial direct costs associated with the leases. The Company includes in the recognition of the right-of-use asset and lease liability those renewal periods that are reasonably certain to be exercised, based on the facts and circumstances that exist at lease inception. Amounts associated with percentage rent provisions are considered variable lease costs and are not included in the initial measurement of the right-of-use asset or lease liability. The Company has made an accounting policy election, applicable to all asset types, not to separate lease from nonlease components when allocating contract consideration related to operating leases. Right-of-use assets and lease liabilities associated with operating leases were included in the accompanying Consolidated Balance Sheets as follows: December 31, (in thousands) Financial Statement Presentation 2021 2020 Right -of- use assets Prepaid expenses and other assets $ 3,099 $ 3,075 Lease liabilitie s Accounts payable and other liabilities 2,570 2,659 Rental Expense Rental expense associated with operating leases is recorded on a straight-line basis over the term of each lease, for leases that have fixed and measurable rent escalations. The difference between rental expense incurred on a straight-line basis and the cash rental payments due under the provisions of the lease is recorded as part of the right-of-use asset in the accompanying December 31, 2021 and 2020 Consolidated Balance Sheets. Amounts associated with percentage rent provisions based on the achievement of sales targets are recognized as variable rental expense when achievement of the sales targets are considered probable. Rental expense is included in Property and operating expense on the accompanying Consolidated Statements of Income and Comprehensive Income. 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”). The Company accounts for stock-based incentives in accordance with ASC 718, Compensation—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 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 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 Consolidated Balance Sheets. Accumulated dividends accrued related to forfeited PRSUs are reversed in the period the forfeiture occurs. Earnings per Share Earnings per common share has been computed pursuant to the guidance in ASC Topic 260, Earnings Per Share, which requires the classification of the Company’s unvested shares of restricted common stock, which contain rights to receive non-forfeitable dividends, as participating securities requiring the two-class method of computing earnings per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends declared (or 106 Table of Contents accumulated) and participation rights in undistributed earnings. In accordance with the two-class method, the Company’s calculation of earnings per share excludes the income attributable to the unvested shares of restricted common stock from the numerator of the calculation and the weighted average number of such unvested shares from the denominator. See Note 16. Recently Adopted Accounting Standards In January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-01, Reference Rate Reform (Topic 848): Scope , which refines the scope of ASC 848, to include all derivative contracts subject to a transition for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest (PAI) as a result of reference rate reform (the “discounting transition”). ASU 2021-01 gives market participants the ability to apply certain aspects of the contract modification and hedge accounting expedients to derivative contracts affected by a discounting transition. ASU 2021-01 permits an entity to elect certain hedging relief if it has designated a derivative as a hedging instrument in a hedging relationship and the terms of the derivative have changed as a result of the discounting transition. The Company will apply the amendments in ASU 2021-01 related to contract modifications and hedging relationships prospectively. Other Recently Issued Accounting Standards In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – 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 are 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 will not have a material impact on the Company. Reclassifications The Company reclassified $ 961.3 million of Unsecured term notes, net at December 31, 2020 to Unsecured term loans, net at December 31, 2021 and $ 472.5 million of Unsecured term notes, net at December 31, 2020 to Senior unsecured notes, net at December 31, 2021 on the Consolidated Balance Sheets, to conform with the current period presentation. The reclassifications are changes from one acceptable presentation to another acceptable presentation. The Company disaggregated $ 39.3 million of Accounts payable and other liabilities to a separate financial statement line item Dividends payable on the Consolidated Balance Sheets at December 31, 2020, to conform with the current period presentation. The reclassification is a change from one acceptable presentation to another acceptable presentation. The components of investment in rental property accounted for using the operating method were previously combined and reported as assets accounted for using the operating method, net of accumulated depreciation on the Consolidated Balance Sheets with separate footnote disclosure of the disaggregated balances. The components of investment in rental property accounted for using the operating method were disaggregated to 107 Table of Contents conform with the current period presentation, which is a change from one acceptable presentation to another acceptable presentation, as follows: As originally reported (in thousands) December 31, 2020 Assets Accounted for using the operating method, net of accumulated depreciation $ 3,354,511 As revised (in thousands) December 31, 2020 Assets Accounted for using the operating method: Land $ 555,748 Land improvements 279,360 Buildings and improvements 2,857,510 Equipment 11,870 Total accounted for using the operating method 3,704,488 Less accumulated depreciation ( 349,977 ) Accounted for using the operating method, net $ 3,354,511 3. Related-Party Transactions Prior to the Internalization on February 7, 2020, BRE, a related party in which certain directors of the Corporation had either a direct or indirect ownership interest, and the Asset Manager were considered to be related parties. Property Management Agreement The Corporation and the OP were parties to a property management agreement (as amended, the “Property Management Agreement”) with BRE. Under the terms of the Property Management Agreement, BRE managed and coordinated certain aspects of the leasing of the Corporation’s rental property. In exchange for services provided under the Property Management Agreement, BRE received certain fees and other compensation as follows: (i) 3 % of gross rentals collected each month from the rental property for property management services (other than one property, which called for 5 % of gross rentals under the Property Management Agreement); and (ii) Re-leasing fees for existing rental property equal to one month’s rent for a new lease with an existing tenant and two months ’ rent for a new lease with a new tenant. Upon completion of the Internalization, the Property Management Agreement was terminated and, prospectively, property management fees were no longer payable to BRE. The Internalization was not considered a “Termination Event” under the Property Management Agreement, therefore no fees were payable to BRE as a result of the Internalization. See Note 4 for further discussion regarding the Internalization, including the associated payments related thereto. Asset Management Agreement The Corporation and the OP were parties to an asset management agreement (as amended, the “Asset Management Agreement”) with the Asset Manager, a single member limited liability company of which BRE 108 Table of Contents was the sole member, and therefore a related party in which certain directors of the Corporation had an indirect ownership interest. Under the terms of the Asset Management Agreement, the Asset Manager was responsible for, among other things, the Corporation’s acquisition, initial leasing, and disposition strategies, financing activities, and providing support to the Corporation’s Independent Directors Committee (“IDC”) for its valuation functions and other duties. The Asset Manager also nominated two individuals to serve on the Board of Directors of the Corporation. Under the terms of the Asset Management Agreement, the Asset Manager was compensated as follows: (i) a quarterly asset management fee equal to 0.25 % of the aggregate value of common stock, based on the per share value as determined by the IDC each quarter, on a fully diluted basis as if all interests in the OP had been converted into shares of the Corporation’s common stock; (ii) 0.5 % of the proceeds from future equity closings as reimbursement for offering, marketing, and brokerage expenses; (iii) 1 % of the gross purchase price paid for each rental property acquired (other than acquisitions described in (iv) below), including any property contributed in exchange for membership interests in the OP; (iv) 2 % of the gross purchase price paid for each rental property acquired in the event that the acquisition of a rental property required a new lease (as opposed to the assumption of an existing lease), such as a sale-leaseback transaction; (v) 1 % of the gross sale price received for each rental property disposition; and (vi) 1 % of the Aggregate Consideration, as defined in the Asset Management Agreement, received in connection with a disposition event, as defined in the Asset Management Agreement. Upon completion of the Internalization, the Asset Management Agreement was terminated and, prospectively, asset management fees were no longer payable to the Asset Manager. The Internalization was not considered a “Termination Event” under the Asset Management Agreement, therefore no fees were payable to the Asset Manager as a result of the Internalization. See Note 4 for further discussion regarding the Internalization, including the associated payments related thereto. Total fees incurred under the Property Management Agreement and Asset Management Agreement were as follows: (in thousands) For the Year Ended December 31, Type of Fee Financial Statement Presentation 2021 2020 (a) 2019 Asset management fee Asset management fees $ — $ 2,461 $ 21,863 Property management fee Property management fees — 1,275 8,256 Total management fee expense — 3,736 30,119 Marketing fee (offering costs) Additional paid-in capital — — 1,649 Acquisition fee Capitalized as a component of assets acquired — — 10,319 Leasing fee and re-leasing fees Leasing fees, net — — 843 Disposition fee Gain on sale of real estate — 109 1,765 Total management fees $ — $ 3,845 $ 44,695 (a) Fees were payable under the Property Management Agreement and Asset Management Agreement from January 1, 2020 through February 6, 2020. The Internalization was effective February 7, 2020. There were no unpaid management fees at December 31, 2021 and 2020. All fees related to the Property Management Agreement and the Asset Management Agreement were paid for in cash within the Company’s normal payment cycle for vendors. 109 Table of Contents Earnout Consideration In connection with the Internalization, the Company incurred a contingent obligation that would be payable to certain members of the Company’s Board of Directors and employees who had previously been owners and/or employees of BRE, upon the occurrence of certain events (see Note 4). As of December 31, 2021, the Company achieved all four VWAP milestones applicable to the earnout. As a result, the Company issued 1,088,977 shares of common stock, 1,859,257 OP Units and made cash payments of $ 13.0 million to these related parties (see Note 4). The earnout consideration at December 31, 2020, consisted of $ 7.5 million recorded as Earnout liability, $ 11.4 million recorded as a component of Additional paid-in capital, and $ 19.4 million recorded as a component of Non-controlling interests on the Consolidated Balance Sheets (see Note 2). Redemption of Shares from Related Party In accordance with the definitive Merger Agreement entered into as part of Internalization, during December 2019, the Company redeemed 941,196 shares of its common stock from BRE, representing BRE’s entire ownership interest in the Company. The shares were redeemed at $ 21.25 per share, the then current determined share value established by the Board of Directors (“Determined Share Value”), for total consideration of $ 20.0 million. Conversion of OP Units to Common Stock During the years ended December 31, 2021 and 2020, in non-cash transactions (see Note 18), the Company converted 2,049,439 and 822,745 OP Units, respectively, held by an affiliated third party to 2,049,439 and 822,745 shares of common stock, respectively, at a total conversion value of $ 32.8 million and $ 15.6 million, respectively. See further discussion in Note 12 and 14. 4. Internalization On February 7, 2020, the Company completed the Internalization and the Company’s management team and corporate staff, who were previously employed by BRE, became employees of an indirect subsidiary of the OP. The Company paid base consideration of $ 209.5 million at closing and additional earnout consideration of up to $ 75.0 million, as described below. In addition, the Company assumed $ 90.5 million of debt in addition to other assets acquired and liabilities assumed, as detailed in the Allocation of Purchase Price discussion elsewhere in this Note 4. The effect of the Internalization has been reflected in the Company’s operating results beginning on February 7, 2020. The consideration paid at closing of the Internalization is summarized in the following table: (in thousands) Issuance of 3,124 shares of common stock $ 66,376 Issuance of 5,278 OP Units 112,159 Cash 30,981 Base consideration 209,516 Initial estimate of fair value of earnout liability 40,119 Total consideration $ 249,635 In accordance with the Internalization, the Company was required to pay additional earnout consideration of up to $ 75.0 million payable in four tranches of $ 10.0 million, $ 15.0 million, $ 25.0 million, and $ 25.0 million if certain milestones related to the 40 -day VWAP per REIT Share were achieved. The consideration consisted of a combination of cash, shares of the Company’s common stock, and OP Units, based on the same proportions paid in the base consideration. 110 Table of Contents As of December 31, 2021, the Company achieved all four VWAP milestones, thereby triggering the payout of all earnout tranches. Below is a summary of the shares of common stock and OP Units issued, and cash paid for each earnout tranche: (in thousands, except per share amounts) Tranche Shares of Common Stock Issued OP Units Issued Cash Paid 40-Day VWAP of a REIT Share Achievement Date 1 145 248 $ 1,926 (a) $ 22.50 June 16, 2021 2 218 371 2,888 (a) 23.75 July 14, 2021 3 363 620 4,117 24.375 September 21, 2021 4 363 620 4,117 25.00 September 21, 2021 (a) Cash payments include amounts earned for dividends. Redemption Rights Agreement If an IPO did not occur on or before the satisfaction of certain milestones related to the 40-day VWAP per REIT Share, then each holder of common shares or OP Units issued in connection with the Internalization had the right to require the Company to repurchase any or all of such holder’s shares or OP Units. Such rights terminated effective with the IPO. Upon occurrence of the IPO in September 2020, the common stock and non-controlling interests issued as base consideration in connection with the Internalization and originally classified as mezzanine equity, were reclassified as a component of Common stock, Additional paid-in capital, and Non-controlling interests on the Consolidated Balance Sheets. Allocation of Purchase Price The Internalization was accounted for as a business combination and accordingly, the Company allocated the purchase price utilizing the acquisition method to record assets acquired and liabilities assumed at their estimated fair values. The allocation of the purchase price has been finalized and is based on the actual valuations of the tangible and intangible assets and liabilities that existed as of the date of completion of the acquisition, including the valuation of the earnout liability. The following table summarizes the Company’s allocation of the purchase price associated with the Internalization: (in thousands) Prepaid expenses and other assets $ 1,336 Right-of-use assets 1,898 Goodwill 339,769 Accounts payable and other liabilities ( 986 ) Operating lease liabilities ( 1,898 ) Debt ( 90,484 ) $ 249,635 In connection with the Internalization, the Company recorded goodwill of $ 339.8 million as a result of the consideration exceeding the fair value of the net liabilities acquired. Goodwill represents the synergies and costs savings expected from the acquired management functions and the Company’s ability to generate additional portfolio growth on a lower cost structure than when it was externally managed. The goodwill is not deductible for tax purposes. 111 Table of Contents In connection with the Internalization, the Company assumed $ 90.5 million of debt which was subsequently repaid through a combination of revolving credit facility borrowings and entering into a new $ 60 .0 million term loan agreement (see Note 9). The Company incurred $ 3.7 million in non-recurring costs associated with the Internalization during each of the years ended December 31, 2020 and 2019, which were classified as Internalization expenses in the Consolidated Statements of Income and Comprehensive Income. The effect of the Internalization has been reflected in the Company’s operating results beginning on February 7, 2020. No incremental revenues were recorded as a result of the Internalization. Subsequent to the Internalization, during the year ended December 31, 2020, the Company incurred $ 20.5 million in expenses as a result of being internalized. Such amounts include general and administrative expenses associated with the Company’s performance of functions previously performed by BRE and the Asset Manager (primarily employee related costs), as well as interest expense associated with the borrowings related to the Internalization. These expenses do not include the Internalization expenses discussed above, or amounts recorded to reflect changes in the fair value of the earnout liability. Condensed Pro Forma Financial Information (Unaudited) The following pro forma information summarizes selected financial information from the Company’s combined results of operations, as if the Internalization had occurred on January 1, 2019. These results contain certain adjustments totaling $ 4.5 million and $ 14.5 million of income for the year ended December 31, 2020 and 2019, respectively. These pro forma adjustments reflect the elimination of Internalization expenses and asset management, property management, and disposition fees between the Company and BRE and the Asset Manager in historical financial results, and adjustments to reflect compensation and related costs, incremental general and administrative expenses related to the Internalization, and incremental interest expense associated with the borrowing related to the Internalization. This pro forma information is presented for informational purposes only, and may not be indicative of what actual results of operations would have been had the Internalization occurred at the beginning of the period, nor does it purport to represent the results of future operations. The condensed pro forma financial information is as follows: For the Year Ended December 31, (in thousands) 2020 2019 Revenues $ 321,637 $ 298,815 Net income 60,783 99,636 112 Table of Contents 5. Acquisitions of Rental Property The Company closed on the following acquisitions during the year ended December 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 (a ) 181 March 11, 2021 Retail 13 26,834 March 30, 2021 Retail 11 41,324 March 31, 2021 Healthcare 3 14,140 June 4, 2021 Retail 2 19,420 June 9, 2021 Industrial 1 8,500 June 9, 2021 Industrial 11 106,578 June 25, 2021 Retail 8 12,131 June 28, 2021 Healthcare 4 15,300 June 30, 2021 Retail 1 1,279 June 30, 2021 Healthcare 7 30,750 July 2, 2021 Industrial (b ) 4,500 July 21, 2021 Retail 1 5,565 July 29, 2021 Retail 3 4,586 July 29, 2021 Industrial 1 13,041 July 30, 2021 Industrial 2 11,011 August 23, 2021 Healthcare 1 60,000 September 8, 2021 Retail 2 8,901 September 17, 2021 Retail 1 1,722 September 24, 2021 Retail 1 2,456 September 24, 2021 Industrial 2 48,699 September 29, 2021 Industrial 1 10,600 September 30, 2021 Industrial 3 59,343 October 1, 2021 Healthcare 1 3,306 October 22, 2021 Industrial 1 5,386 October 27, 2021 Retail 3 4,278 December 10, 2021 Retail 16 33,500 December 15, 2021 Industrial 1 16,000 December 15, 2021 Healthcare 1 6,000 December 16, 2021 Restaurant/Office 6 28,546 December 17, 2021 Retail 3 4,260 December 17, 2021 Industrial 1 16,000 December 22, 2021 Industrial 2 22,651 December 22, 2021 Healthcare 1 7,600 116 $ 659,231 (c) (a) Acquisition of additional land adjacent to an existing property. (b) Acquisition of land related to an existing property. (c) Acquisition price does not include capitalized acquisition costs of $ 5.8 million. 113 Table of Contents The Company closed on the following acquisitions during the year ended December 31, 2020: (in thousands, except number of properties) Number of Real Estate Date Property Type Properties Acquisition Price November 13, 2020 Healthcare 1 $ 4,950 December 7, 2020 Industrial 8 28,000 December 23, 2020 Industrial 1 36,473 (d) December 28, 2020 Retail 1 5,150 December 29, 2020 Restaurant 7 13,189 December 30, 2020 Industrial 1 8,050 19 $ 95,812 (e) (d) Acquisition price excludes $ 4.5 million deposited in an escrow for the future purchase of the related land. The land purchase closed on July 2, 2021, and is included in the 2021 acquisitions. (e) Acquisition price does not include capitalized acquisition costs of $ 1.3 million. The Company closed on the following acquisitions during the year ended December 31, 2019: (in thousands, except number of properties) Number of Real Estate Date Property Type Properties Acquisition Price January 31, 2019 Healthcare 1 $ 4,747 March 12, 2019 Industrial 1 10,217 March 15, 2019 Retail 10 13,185 March 19, 2019 Retail 14 19,128 March 26, 2019 Industrial 1 25,801 April 30, 2019 Industrial 1 76,000 (f) May 21, 2019 Retail 2 6,500 May 31, 2019 Retail 1 3,192 June 7, 2019 Office 1 30,589 June 26, 2019 Industrial 2 11,180 July 15, 2019 Restaurant 1 3,214 July 15, 2019 Industrial 1 11,330 July 31, 2019 Healthcare 5 27,277 August 27, 2019 Industrial 1 4,404 August 29, 2019 Industrial/Office 23 735,740 September 17, 2019 Industrial 1 11,185 October 31, 2019 Retail/Healthcare 3 12,922 November 7, 2019 Restaurant 1 3,142 November 20, 2019 Retail 1 7,385 November 22, 2019 Industrial 1 6,500 November 27, 2019 Retail 2 8,243 74 $ 1,031,881 (g) (f) In conjunction with this acquisition, the Company assumed a mortgage with a principal balance of $ 49.8 million with an interest rate of 4.92 % and a maturity date of February 2028 (see Note 10). (g) Acquisition price does not include capitalized acquisition costs of $ 17.6 million. 114 Table of Contents 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 Year Ended December 31, (in thousands) 2021 2020 2019 Land $ 114,296 $ 17,403 $ 161,182 Land improvements 29,298 5,356 47,391 Buildings and improvements 469,113 64,116 772,998 Acquired in-place leases (h) 51,956 8,346 80,952 Acquired above-market leases (i) 211 1,717 2,800 Acquired below-market leases (j) — ( 428 ) ( 15,811 ) Right-of-use asset 663 — — Lease liability ( 481 ) — — Sales-type investments — 574 — Mortgage payable — — ( 49,782 ) $ 665,056 $ 97,084 $ 999,730 (h) The weighted average amortization period for acquired in-place leases is 16 years, 15 years, and 13 years for acquisitions completed during the years ended December 31, 2021, 2020, and 2019, respectively. (i) The weighted average amortization period for acquired above-market leases is 10 years, 1 year, and 18 years for acquisitions completed during the years ended December 31, 2021, 2020, and 2019, respectively. (j) The weighted average amortization period for acquired below-market leases is 10 years for acquisitions completed during each of the years ended December 31, 2020, and 2019. There were no below-market leases acquired during the year ended December 31, 2021. The above acquisitions were funded using a combination of available cash on hand, revolving credit facility borrowings, and proceeds from unsecured term loans, equity issuances, and the 2031 Senior Unsecured Public Notes (see Note 9). All real estate acquisitions closed during the years ended December 31, 2021, 2020, and 2019, qualified as asset acquisitions and, as such, acquisition costs have been capitalized. Subsequent to December 31, 2021, the Company closed on the following acquisitions (see Note 20): (in thousands, except number of properties) Date Property Type Number of Properties Acquisition Price January 7, 2022 Retail 2 $ 2,573 February 10, 2022 Industrial 1 21,733 February 15,202 Retail 1 1,341 4 $ 25,647 6. Sale of Real Estate The Company closed on the following sales of real estate, none of which qualified as discontinued operations: For the Year Ended December 31, (in thousands, except number of properties) 2021 2020 2019 Number of properties disposed 31 24 49 Aggregate sale price $ 87,730 $ 81,039 $ 176,486 Aggregate carrying value ( 70,289 ) ( 62,528 ) ( 138,845 ) Additional sales expenses ( 3,918 ) ( 3,526 ) ( 7,727 ) Gain on sale of real estate $ 13,523 $ 14,985 $ 29,914 115 Table of Contents 7. 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 December 31, 2021, the Company had 726 real estate properties, 713 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 (see Revenue Recognition within Note 2) . Substantially all 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 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—Accounted for Using the Operating Method Depreciation expense on investment in rental property was as follows: For the Year Ended December 31, (in thousands) 2021 2020 2019 Depreciation $ 99,143 $ 93,679 $ 83,797 Estimated lease payments to be received under non-cancelable operating leases with tenants at December 31, 2021 are as follows: (in thousands) 2022 $ 334,163 2023 338,889 2024 335,624 2025 328,914 2026 319,124 Thereafter 2,281,067 $ 3,937,781 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. Investment in Rental Property—Direct Financing Leases The Company’s net investment in direct financing leases was comprised of the following: December 31, (in thousands) 2021 2020 Undiscounted estimated lease payments to be received $ 42,602 $ 45,782 Estimated unguaranteed residual values 15,203 15,203 Unearned revenue ( 28,893 ) ( 31,753 ) Reserve for credit losses ( 130 ) ( 166 ) Net investment in direct financing leases $ 28,782 $ 29,066 116 Table of Contents Undiscounted estimated lease payments to be received under non-cancelable direct financing leases with tenants at December 31, 2021 are as follows: (in thousands) 2022 $ 3,241 2023 3,304 2024 3,361 2025 3,475 2026 3,547 Thereafter 25,674 $ 42,602 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 Consolidated Statements of Income and Comprehensive Income: For the Year Ended December 31, (in thousands) 2021 2020 2019 Contractual rental amounts billed for operating leases $ 308,624 $ 281,998 $ 257,695 Adjustment to recognize contractual operating lease billings on a straight-line basis 19,847 25,200 22,109 Write-off of accrued rental income ( 442 ) ( 4,235 ) — Variable rental amounts earned 768 743 152 Earned income from direct financing leases 2,909 3,355 4,018 Interest income from sales-type leases 58 5 — Operating expenses billed to tenants 17,462 15,845 14,614 Other income from real estate transactions (a) 33,549 799 668 Adjustment to revenue recognized for uncollectible rental amounts billed, net 101 ( 2,073 ) ( 441 ) Total Lease revenues, net $ 382,876 $ 321,637 $ 298,815 (a) The December 31, 2021 amount includes the write-off of $ 1.5 million of accrued rental income associated with a lease termination transaction. Refer to the Company’s policy footnote on Long-lived Asset Impairment in Note 2 for further discussion of lease termination income recognized during the year ended December 31, 2021. 117 Table of Contents 8. Intangible Assets and Liabilities The following is a summary of intangible assets and liabilities and related accumulated amortization: December 31, (in thousands) 2021 2020 Lease intangibles: Acquired above-market leases $ 47,147 $ 54,616 Less accumulated amortization ( 16,807 ) ( 18,928 ) Acquired above-market leases, net 30,340 35,688 Acquired in-place leases 380,766 340,958 Less accumulated amortization ( 107,464 ) ( 85,733 ) Acquired in-place leases, net 273,302 255,225 Total Intangible lease assets, net $ 303,642 $ 290,913 Acquired below-market leases $ 105,310 $ 107,788 Less accumulated amortization ( 34,714 ) ( 28,135 ) Intangible lease liabilities, net $ 70,596 $ 79,653 Leasing fees $ 14,786 $ 15,462 Less accumulated amortization ( 5,145 ) ( 4,724 ) Leasing fees, net $ 9,641 $ 10,738 Amortization of intangible lease assets and liabilities was as follows: (in thousands) For the Year Ended December 31, Intangible Financial Statement Presentation 2021 2020 2019 Acquired in-place leases and leasing fees Depreciation and amortization $ 32,857 $ 38,934 $ 25,021 Above-market and below-market leases Lease revenues, net 3,264 1,127 3,419 For the years ended December 31, 2021 and 2020, amortization of all intangible assets and liabilities includes $ 3.8 million and $ 14.5 million, respectively, of accelerated amortization resulting from early lease terminations. There was no accelerated amortization for the year ended December 31, 2019. Estimated future amortization of all intangible assets and liabilities at December 31, 2021 is as follows: (in thousands) 2022 $ 25,289 2023 24,982 2024 24,222 2025 22,925 2026 21,576 Thereafter 123,693 $ 242,687 9. Unsecured Credit Agreements Unsecured Revolving Credit Agreements Unsecured Revolving Credit Facility On September 4, 2020, the Company entered into an agreement (the “Revolving Credit Agreement”) for a $ 900.0 million unsecured revolving credit facility (the “Revolving Credit Facility”), with JPMorgan Chase Bank, 118 Table of Contents N.A., as Administrative Agent. The Company closed the Revolving Credit Agreement on September 21, 2020, at which time the Revolving Credit Facility replaced the Company’s then existing $ 600.0 million senior unsecured revolving credit facility (described below). The Revolving Credit Agreement includes an accordion feature to increase the aggregate facility size from $ 900.0 million to $ 2.0 billion, subject to the willingness of existing or new lenders to fund such increase and other customary conditions. The Company has the option to extend the term of the Revolving Credit Agreement twice for six months per extension , subject to certain conditions, including payment of an extension fee equal to 0.0625 % of the revolving commitments. Borrowings under the Revolving Credit Agreement are subject to interest only payments at variable rates equal to LIBOR plus a margin based on the Company’s credit rating, ranging from 0.825 % to 1.55 % per annum. In addition, the Revolving Credit Facility is subject to a facility fee based on the Company’s credit rating, ranging between 0.125 % and 0.30 % per annum. Unsecured Revolving Credit and Term Loan Agreement On June 23, 2017, the Company entered into an $ 800.0 million unsecured revolving credit and term loan agreement (“Unsecured Revolving Credit and Term Loan Agreement”) with a group of lenders. The Unsecured Revolving Credit and Term Loan Agreement consisted of a $ 400.0 million senior unsecured revolving credit facility, a $ 250.0 million senior unsecured delayed draw term loan (“2023 Unsecured Term Loan”), and a $ 150.0 million senior unsecured delayed draw term loan (“2024 Unsecured Term Loan”). The Unsecured Revolving Credit and Term Loan Agreement provides an accordion feature for up to a total of $ 1.0 billion of borrowing capacity. The senior unsecured revolving credit facility included a $ 35.0 million sublimit for swingline loans and $ 20.0 million available for issuance of letters of credit. On November 20, 2017, pursuant to the terms of a Consent and Agreement Regarding Commitment Increases and Additional Term Loans (the “Commitment Increase”) the OP obtained an additional $ 80.0 million in credit commitments from existing and certain new lenders, raising the total available borrowings under the Unsecured Revolving Credit and Term Loan Agreement to $ 880.0 million. Except as amended by the Commitment Increase, all terms and conditions of the Unsecured Revolving Credit and Term Loan Agreement remained the same as those in effect prior to the Commitment Increase. As amended by the Commitment Increase, the Unsecured Revolving Credit and Term Loan Agreement consisted of the $ 425.0 million senior unsecured revolving credit facility, the $ 265.0 million 2023 million Unsecured Term Loan, and the $ 190.0 million 2024 Unsecured Term Loan. On February 28, 2019, the Company amended the Unsecured Revolving Credit and Term Loan Agreement to increase the amount available under the senior unsecured revolving credit facility from $ 425.0 million to $ 600.0 million. This increased the total available borrowings under the Unsecured Revolving Credit and Term Loan Agreement to $ 1.1 billion. All other terms and conditions of the Unsecured Revolving Credit and Term Loan Agreement remained the same as those in effect prior to this amendment. On September 4, 2020, the senior unsecured revolving credit facility under the Unsecured Revolving Credit and Term Loan Agreement was replaced by the $ 900.0 million Revolving Credit Facility described above. Unsecured Term Loan Agreements 2022 Unsecured Term Loan On February 7, 2020, the Company entered into a $ 60.0 million term loan agreement (the “2022 Unsecured Term Loan”) with JP Morgan Chase, N.A. as administrative agent. The 2022 Unsecured Term Loan was fully funded at closing and used to repay a portion of the debt assumed by the Company as part of the Internalization. Borrowings under the 2022 Unsecured Term Loan are subject to interest only payments at variable rates equal to LIBOR plus a margin based upon the Company’s credit rating, ranging between 0.85 % and 1.65 % per annum. 119 Table of Contents 2023 and 2024 Unsecured Term Loans The terms of the 2023 Unsecured Term Loan and 2024 Unsecured Term Loan are pursuant to the Unsecured Revolving Credit and Term Loan Agreement described above. Borrowings under the 2024 Unsecured Term Loan bear interest at variable rates based on LIBOR plus a margin based on the OP’s credit rating ranging between 0.85 % and 1.65 % per annum. Borrowings under the 2023 Unsecured Term Loan bore interest at variable rates based on LIBOR plus a margin based on the OP’s credit rating ranging between 0.90 % and 1.75 % per annum. The borrowings under the 2023 Unsecured Term Loan were repaid in full with proceeds from the 2031 Senior Unsecured Public Notes in September 2021 described below. 2026 Unsecured Term Loan On February 27, 2019, the Company entered into a $ 450.0 million seven-year unsecured term loan agreement (the “2026 Unsecured Term Loan”) with Capital One, National Association as administrative agent. The 2026 Unsecured Term Loan provides an accordion feature for up to a total of $ 550.0 million borrowing capacity. The 2026 Unsecured Term Loan has an initial maturity date of February 27, 2026 . Borrowings under the 2026 Unsecured Term Loan were subject to interest only payments at variable rates equal to LIBOR plus a margin between 1.45 % and 2.40 % per annum based on the OP’s credit rating through March 12, 2021. On March 12, 2021, the Company amended the 2026 Unsecured Term Loan and made a $ 50.0 million paydown on the loan. The amendment reduced the margin on variable interest rate borrowings to a range between 0.85 % and 1.65 % per annum based on the OP’s credit rating. All other terms and conditions of the 2026 Unsecured Term Loan remained materially the same as those in effect prior to this amendment. The 2026 Unsecured Term Loan is subject to a fee of 0.25 % per annum on the amount of the commitment, reduced by the amount of term loans outstanding. Senior Unsecured Notes 2027 Senior Unsecured Notes—Series A On April 18, 2017, the Company issued $ 150.0 million of unsecured, fixed-rate, interest-only guaranteed senior promissory notes (the “2027 Senior Unsecured Notes—Series A”). The Series A Notes were issued at par, bear interest at a rate of 4.84 %. 2028 Senior Unsecured Notes—Series B and 2030 Senior Unsecured Notes—Series C On July 2, 2018, the Company entered into a Note and Guaranty Agreement (the “NGA Agreement”) with each of the purchasers of unsecured, fixed-rate, interest-only, guaranteed senior promissory notes. Under the NGA Agreement, the OP issued and sold senior promissory notes in two series, Series B Guaranteed Senior Notes (the “2028 Senior Unsecured Notes—Series B”) and Series C Guaranteed Senior Notes (the “2030 Unsecured Notes—Series C”), for an aggregate principal amount of $ 325.0 million. The 2028 Senior Unsecured Notes—Series B provide for an aggregate principal amount of $ 225.0 million with a fixed-rate of 5.09 %. The 2030 Senior Unsecured Notes—Series C provide for an aggregate principal amount of $ 100.0 million with a fixed-rate of 5.19 %. 2031 Senior Unsecured Public Notes On September 15, 2021, the Company completed a public offering of $ 375.0 million in aggregate principal amount of 2.60 % senior unsecured notes due 2031 (“2031 Senior Unsecured Public Notes”), issued at 99.816 % of the principal amount. The 2031 Senior Unsecured Public Notes require semi-annual interest payments through the maturity date of September 15, 2031 , unless earlier redeemed. The 2031 Senior Unsecured Public Notes were issued by the OP and are fully and unconditionally guaranteed by the Company. The proceeds were used to repay in full borrowings on the Revolving Credit Facility and the 2023 Unsecured Term Loan, and to fund acquisitions. 120 Table of Contents Covenants on Unsecured Credit 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 December 31, 2021, 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. The following table summarizes the Company’s unsecured credit agreements: Outstanding Balance December 31, (in thousands, except interest rates) 2021 2020 Interest Rate (a) (b) Maturity Date Unsecured revolving credit facility $ 102,000 $ — one-month LIBOR + 1.00 % (c) Sep. 2023 Unsecured term loans: 2022 Unsecured Term Loan 60,000 60,000 one-month LIBOR + 1.00 % (d) Feb. 2022 2023 Unsecured Term Loan — 265,000 one-month LIBOR + 1.10 % (e) Jan. 2023 (f) 2024 Unsecured Term Loan 190,000 190,000 one-month LIBOR + 1.00 % (d) J un. 2024 2026 Unsecured Term Loan 400,000 450,000 one-month LIBOR + 1.00 % (g) Feb. 2026 Total unsecured term loans 650,000 965,000 Unamortized debt issuance costs, net ( 3,329 ) ( 3,670 ) Total unsecured term loans, net 646,671 961,330 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 — 2.60 % Sep. 2031 Total senior unsecured notes 850,000 475,000 Unamortized debt issuance costs and original issuance discount, net ( 6,199 ) ( 2,534 ) Total senior unsecured notes, net 843,801 472,466 Total unsecured debt, net $ 1,592,472 $ 1,433,796 (a) At December 31, 2021 and 2020, one-month LIBOR was 0.10 % and 0.14 %, respectively. (b) In January 2021, the Company received a cr e dit rating of ‘BBB’ from S&P, changing the applicable margin on variable rate unsecured debt effective February 1, 2021. In September 2021, Moody’s upgraded our credit rating to ‘Baa2’. (c) At December 31, 2020, interest rate was one-month LIBOR plus 1.20 %. (d) At December 31, 2020, interest rate was one-month LIBOR plus 1.25 %. (e) At December 31, 2020, interest rate was one-month LIBOR plus 1.35 %. (f) The 2023 Unsecured Term Loan was paid in full with proceeds from the 2031 Senior Unsecured Public Notes in September 2021. (g) At December 31, 2020, interest rate was one-month LIBOR plus 1.85 %. 121 Table of Contents At December 31, 2021, the weighted average interest rate on all outstanding borrowings was 2.62 %, exclusive of interest rate swap agreements. For the year ended December 31, 2021, the Company incurred $ 5.0 million in debt issuance costs and original issuance discount associated with the 2031 Senior Unsecured Public Notes and the amended 2026 Unsecured Term Loan. For the year ended December 31, 2020, the Company incurred $ 5.9 million in debt issuance costs associated with the Revolving Credit Facility. For the year ended December 31, 2019, the Company incurred $ 6.5 million in debt issuance costs associated with the 2020 Unsecured Term Loan, the 2026 Unsecured Term Loan and its prior unsecured revolving credit agreement. 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 extinguishment of existing debt. Debt issuance costs are either deferred and amortized over the term of the associated debt or expensed as incurred. Based on the assessments, $ 5.0 million, $ 5.9 million and $ 6.5 million of debt issuance costs and original issuance discounts incurred during the years ended December 31, 2021, 2020, and 2019, respectively, were deemed to be related to new debt, and the modification of existing debt, and therefore have been deferred and are being amortized over the term of the associated debt. Additionally, during the years ended December 31, 2021, 2020, and 2019, $ 0.3 million, $ 0.4 million and $ 0.3 million, respectively, of unamortized debt issuance costs were expensed, and included in Cost of debt extinguishment in the accompanying Consolidated Statements of Income and Comprehensive Income. Debt issuance costs and original issuance discounts are amortized as a component of Interest expense in the accompanying Consolidated Statements of Income and Comprehensive Income. The following table summarizes debt issuance cost and original issuance discount amortization: For the Year Ended December 31, (in thousands) 2021 2020 2019 Debt issuance costs and original issuance discount amortization $ 3,854 $ 3,445 $ 2,685 122 Table of Contents 10. Mortgages The Company’s mortgages consist of the following: (in thousands, except interest rates) Origination Date (Month/Year) Maturity Date (Month/Year) Interest Rate December 31, Lender 2021 2020 Wilmington Trust National Association Apr -1 9 Feb-2 8 4.92 % $ 46,760 $ 47,945 (a) (b) (c) (j) Wilmington Trust National Association Jun -1 8 Aug-2 5 4.36 % 19,557 19,947 (a) (b) (c) (i) PNC Bank Oct -1 6 Nov-2 6 3.62 % 17,094 17,498 (b) (c) T2 Durham I, LLC Jul -21 Jul-2 4 Greater of Prime + 1.25 % or 5.00 % 7,500 — (b) (k) Aegon Apr -12 Oct-2 3 6.38 % 6,249 7,039 (b) (f) Sun Life Mar -12 Oct-2 1 5.13 % — 10,469 (b) (e) M&T Bank Oct -17 Aug-2 1 one-month LIBOR+ 3 % — 4,769 (b) (d) (g) (h) Total mortgages 97,160 107,667 Debt issuance costs, net ( 314 ) ( 285 ) Mortgages, net $ 96,846 $ 107,382 (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) Debt secured by guaranty of the Corporation. (e) Mortgage was assumed in March 2012 as part of an UPREIT transaction. The debt was recorded at fair value at the time of the assumption. (f) 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. (g) The Company entered into an interest rate swap agreement in connection with the mortgage, as further described in Note 11. (h) Mortgage was assumed in October 2017 as part of an UPREIT transaction. The debt was recorded at fair value at the time of the assumption. (i) 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. (j) 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. (k) 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 December 31, 2021, the interest rate was 5.00 % At December 31, 2021, investment in rental property of $ 161.6 million was pledged as collateral against the Company’s mortgages. 123 Table of Contents Estimated future principal payments to be made under the above mortgage and the Company’s unsecured credit agreements (see Note 9) at December 31, 2021, are as follows: (in thousands) 2022 $ 62,906 2023 109,582 2024 199,760 2025 20,195 2026 416,843 Thereafter 889,874 $ 1,699,160 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. 11. 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. In connection with the issuance of the 2031 Senior Unsecured Public Notes in September 2021 and repayment of outstanding borrowings of variable rate debt indexed to the one-month LIBOR rate (see Note 9), the Company terminated interest rate swap agreements with an aggregate termination value of $5.6 million. The Company determined that it is not probable the hedge forecasted transactions will not occur during the original periods, and therefore, the $5.6 million of accumulated losses held in Other comprehensive income will be reclassified to interest expense on a straight-line basis over the original lives of the terminated swaps. For the year ended December 31, 2021, amounts reclassified out of Other comprehensive income to Interest expense were $0.1 million. 124 Table of Contents The following is a summary of the Company’s outstanding interest rate swap agreements: (in thousands, except interest rates) December 31, 2021 December 31, 2020 Counterparty Maturity Date Fixed Rate Notional Amount Fair Value Notional Amount Fair Value Wells Fargo Bank, N.A. February 2021 2.39 % $ — $ — $ 35,000 $ ( 70 ) M&T Bank August 2021 1.02 % — — 4,768 ( 25 ) (a) Capital One, National Association December 2021 1.05 % — — (b) 15,000 ( 141 ) M&T Bank September 2022 2.83 % — — (b) 25,000 ( 1,139 ) Bank of America, N.A. November 2023 2.80 % — — (b) 25,000 ( 1,848 ) M&T Bank November 2023 2.65 % — — (b) 25,000 ( 1,785 ) Regions Bank December 2023 1.18 % — — (b) 25,000 ( 763 ) Truist Financial Corporation April 2024 1.99 % — — (b) 25,000 ( 1,487 ) Bank of Montreal July 2024 1.16 % — — (b) 40,000 ( 1,380 ) Wells Fargo Bank, N.A. October 2024 2.72 % 15,000 ( 702 ) 15,000 ( 1,422 ) Capital One, National Association December 2024 1.58 % 15,000 ( 241 ) 15,000 ( 799 ) Bank of Montreal January 2025 1.91 % 25,000 ( 649 ) 25,000 ( 1,725 ) Truist Financial Corporation April 2025 2.20 % 25,000 ( 905 ) 25,000 ( 2,084 ) Bank of Montreal July 2025 2.32 % 25,000 ( 1,049 ) 25,000 ( 2,351 ) Truist Financial Corporation July 2025 1.99 % 25,000 ( 767 ) 25,000 ( 1,941 ) Truist Financial Corporation December 2025 2.30 % 25,000 ( 1,125 ) 25,000 ( 2,481 ) Bank of Montreal January 2026 1.92 % 25,000 ( 760 ) 25,000 ( 2,039 ) Bank of Montreal January 2026 2.05 % 40,000 ( 1,415 ) 40,000 ( 3,523 ) Capital One, National Association January 2026 2.08 % 35,000 ( 1,274 ) 35,000 ( 3,078 ) Truist Financial Corporation January 2026 1.93 % 25,000 ( 768 ) 25,000 ( 2,019 ) Capital One, National Association April 2026 2.68 % 15,000 ( 941 ) 15,000 ( 1,843 ) Capital One, National Association July 2026 1.32 % 35,000 ( 205 ) 35,000 ( 1,806 ) Bank of Montreal December 2026 2.33 % 10,000 ( 538 ) 10,000 ( 1,156 ) Bank of Montreal December 2026 1.99 % 25,000 ( 936 ) 25,000 ( 2,372 ) Wells Fargo Bank, N.A. April 2027 2.72 % 25,000 ( 1,887 ) 25,000 ( 3,555 ) Bank of Montreal December 2027 2.37 % 25,000 ( 1,570 ) 25,000 ( 3,234 ) Capital One, National Association December 2027 2.37 % 25,000 ( 1,575 ) 25,000 ( 3,199 ) Wells Fargo Bank, N.A. January 2028 2.37 % 75,000 ( 4,741 ) 75,000 ( 9,650 ) Bank of Montreal May 2029 2.09 % 25,000 ( 1,316 ) 25,000 ( 2,994 ) Regions Bank May 2029 2.11 % 25,000 ( 1,356 ) 25,000 ( 3,004 ) Regions Bank June 2029 2.03 % 25,000 ( 1,222 ) 25,000 ( 2,843 ) U.S. Bank National Association June 2029 2.03 % 25,000 ( 1,220 ) 25,000 ( 2,902 ) U.S. Bank National Association August 2029 1.35 % 25,000 ( 9 ) 25,000 ( 1,445 ) $ 640,000 $ ( 27,171 ) $ 859,768 $ ( 72,103 ) (a) Interest rate swap was assumed in October 2017 as part of an UPREIT transaction. (b) Interest rate swap was terminated in September 2021 . At December 31, 2021, the weighted average fixed rate on all outstanding interest rate swaps was 2.11 %. 125 Table of Contents The total amounts recognized, and the location in the accompanying Consolidated Statements of Income and Comprehensive Income, from converting from variable rates to fixed rates under these agreements were as follows: Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss Reclassification from Accumulated Other Comprehensive Loss Total Interest Expense Presented in the Consolidated Statements of Income and Comprehensive Income (in thousands) Amount of (Loss) Gain For the years ended December 31, Location 2021 $ 39,353 Interest expense $ ( 16,136 ) $ 64,146 2020 ( 50,544 ) Interest expense ( 12,656 ) 76,138 2019 ( 37,372 ) Interest expense 1,492 72,534 Amounts related to the interest rate swaps expected to be reclassified out of Accumulated other comprehensive loss to Interest expense during the next twelve months are estimated to be a loss of $ 13.1 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. 12. Non-Controlling Interests Under the Company’s UPREIT structure, entities and individuals can contribute their properties in exchange for OP Units. There were no UPREIT transactions during the years ended December 31, 2021, 2020, and 2019. The cumulative amount of UPREIT properties contributed, less assumed debt, amounted to $ 128.7 million as of December 31, 2021 and 2020. In exchange for the properties contributed and as part of the Internalization, 6,058,080 and 4,265,126 non-controlling OP Units were issued and outstanding, respectively, as of December 31, 2021, representing a 6.0 % interest in the OP at December 31, 2021. In exchange for the properties contributed and as part of the Internalization, 6,943,130 and 4,455,308 non-controlling OP Units were issued and outstanding, respectively, as of December 31, 2020, representing a 7.3 % interest in the OP at December 31, 2020. In exchange for the properties contributed, 6,948,185 non-controlling OP Units were issued and outstanding as of December 31, 2019, representing a 6.3 % interest in the OP at December 31, 2019. The OP Units are economically equivalent to the Corporation’s common stock and, subject to certain restrictions, are convertible into the Company’s common stock at the option of the respective unit holders on a one-to-one basis. The OP Units are redeemable for cash at the option of the holder, however, the Company may issue shares in lieu of cash. Therefore the OP Units are considered to be permanent equity. Exchanges of OP Units held by non-controlling interest holders are recorded by reducing non-controlling interest on a historical cost basis with a corresponding increase in common stock and additional paid-in capital. The following table summarizes OP Units exchanged for shares of common stock: For the Year Ended December 31, (in thousands) 2021 2020 2019 OP Units exchanged for shares of common stock 2,935 822 — Value of units exchanged $ 46,968 $ 15,631 $ — As of December 31, 2021, the Company achieved all four VWAP milestones applicable to the earnout. As a result, the Company issued 1,859,257 OP Units during the year ended December 31, 2021 (see Note 4). Holders of the OP Units do not have voting rights at the Corporation level. 126 Table of Contents 13. Credit Risk Concentrations The Company maintained bank balances that, at times, exceeded the federally insured limit during the years ended December 31, 2021, 2020, and 2019. 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. Prior to the Internalization on February 7, 2020, the Company’s rental property was managed by BRE and the Asset Manager as described in Note 3. Management fees paid to BRE and the Asset Manager represented 2 %, and 18 % of total operating expenses for the years ended December 31, 2020 and 2019, respectively. These amounts do not include acquisition fees paid to the Asset Manager that were capitalized (see Note 3). There were no management fees paid to BRE or the Asset Manager during the year ended December 31, 2021. For the years ended December 31, 2021, 2020, and 2019, the Company had no individual tenants or common franchises that accounted for more than 10 % of total revenues, excluding lease termination fees. 14. Equity General On September 21, 2020, the Corporation completed its IPO and issued 37,000,000 shares of Class A Common Stock inclusive of the underwriters’ partial exercise of their over-allotment option on October 20, 2020. Aside from the conversion discussed below, the terms of the Class A Common Stock were identical to the terms of the Common Stock. Each share of Class A Common Stock automatically converted into one share of Common Stock on March 20, 2021, and effective March 22, 2021, all shares of Common Stock were listed and freely tradeable on the NYSE under the ticker “BNL.” The Common Stock and Class A Common Stock are collectively referred to as the Corporation’s “common stock.” On June 28, 2021, the Corporation completed its first public follow-on equity offering and issued 11,500,000 shares of Common Stock, inclusive of the underwriters’ full exercise of their over-allotment option, at $ 23.00 per share. The net proceeds, after deducting underwriting discounts and commissions of $ 10.6 million and $ 0.4 million of other expenses, were $ 253.5 million. The Company used the net proceeds to repay the remaining $ 160.6 million principal due under the Company’s revolving credit facility. The remaining net proceeds were used for general business purposes, including acquisitions. On August 23, 2021, 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. During the year ended December 31, 2021, the Company issued 1,071,500 shares of common stock at a weighted average sale price of $ 26.26 per share under the ATM Program. The net proceeds, after deducting $ 0.3 million for commission and $ 0.5 million for other issuance expenses, were $ 27.3 million. At December 31, 2021, the Company could issue additional common stock with an aggregate sales price of up to $ 371.9 million under the ATM Program. As of December 31, 2021, the Company achieved all four VWAP milestones applicable to the earnout. As a result, the Company issued 1,088,977 shares of common stock during the year ended December 31, 2021 (see Note 4). 127 Table of Contents Common Stock The shares of the Corporation’s common stock entitle the holders to one vote per share on all matters upon which stockholders are entitled to vote, to receive dividends and other distributions as authorized by the Board of Directors in accordance with the Maryland General Corporation Law, and to all rights of a stockholder pursuant to the Maryland General Corporation Law. The common stock has no preferences or preemptive conversion or exchange rights. Pursuant to the limited liability company agreement between the Corporation and the OP, each outstanding OP Unit is convertible into one share of the Corporation’s common stock, subject to the terms and conditions set forth in the OP’s operating agreement. Preferred Stock The Charter also provides the Board of Directors with the authority to issue one or more classes or series of preferred stock, and prior to the issuance of such shares of preferred stock, the Board of Directors shall have the power from time to time to classify or reclassify, in one or more series, any unissued shares and designate the preferences, rights and privileges of such shares of preferred stock. At December 31, 2021 and 2020, no shares of the Corporation’s preferred stock were issued and outstanding. Share Redemption Program The Board of Directors approved a share redemption program (“Share Redemption Program”) under which the Corporation could repurchase shares of its outstanding common stock after December 31, 2009. The Board of Directors approved and adopted an amended and restated Share Redemption Program effective as of June 28, 2017. Under the Share Redemption Program, stockholders could request that the Corporation redeem shares after one year from the original investment date, subject to certain exceptions as set forth in the Share Redemption Program. Under the Share Redemption Program, the Corporation was not obligated to repurchase shares and, notwithstanding any other term of the Share Redemption Program, the Board of Directors or IDC could reject any share redemption request made by any stockholder at any time. Shares held for more than 12 months, but less than five years, were redeemed at a purchase price equal to 95 % of the current Determined Share Value, and shares held for five years or more were redeemed at a purchase price equal to 100 % of the current Determined Share Value, subject to certain exemptions as set forth in the Share Redemption Program. Total shares redeemed pursuant to the Share Redemption Program in any quarter could not exceed 1% of the total number of shares outstanding at the beginning of the calendar year plus 50% of the total number of any additional shares issued during the prior calendar quarter under the DRIP (as defined below), provided that the total number of shares redeemed during any calendar year could not exceed 5% of the number of shares outstanding as of the first day of such calendar year. The Board of Directors or the IDC could amend, suspend, or terminate the Share Redemption Program at any time upon 30 days’ notice to the Corporation’s stockholders. On January 10, 2020, the Corporation announced that it would be terminating the Share Redemption Program, effective February 10, 2020 . The following table summarizes redemptions under the Company’s Share Redemption Program: For the Year Ended December 31, (in thousands, except number of redemptions) 2020 2019 Number of redemptions requested — 96 Number of shares — 2,610 Aggregate redemption price $ — $ 54,599 128 Table of Contents The 2019 redemption amounts include the redemption of shares from BRE, as discussed in Note 3. Distribution Reinvestment Plan The Corporation had adopted a Distribution Reinvestment Plan (“DRIP”), pursuant to which the Corporation’s stockholders and holders of OP Units (other than the Corporation), could elect to have cash distributions reinvested in additional shares of the Corporation’s common stock. The DRIP was terminated effective February 10, 2020. At December 31, 2020 and 2019 a total of 12,300,812 and 12,019,170 shares of common stock, respectively, were issued under the DRIP. 15. Stock-Based Compensation Restricted Stock Awards The Company awarded 199,430 and 340,976 shares of RSAs, during the years ended December 31, 2021 and 2020, 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 year ended December 31, 2021 was $ 18.66 , which was based on the market price per share of the Company’s common stock on the grant date. The weighted average value per share of awards granted during the year ended December 31, 2020 was $ 20.50 , which was based on the Determined Share Value. Prior to the IPO, the Company sold shares of common stock in a private offering at a price equal to the Determined Share Value, which was established at least quarterly by the Board of Directors based on the net asset value (“NAV”) of the Company’s portfolio, input from management and third-party consultants, and such other factors as the Board of Directors determined. The Company’s NAV was calculated using its established valuation process, starting with an estimate of the fair value of the properties in the portfolio as of the date based upon, among other factors, the implied market price for each asset based upon a review of market capitalization rates. There were no RSAs during the year ended December 31, 2019. The following table presents information about the Company’s RSAs: For the year ended December 31, (in thousands) 2021 2020 Compensation cost $ 3,926 $ 1,989 Dividends declared on unvested RSAs 394 131 Grant date fair value of shares vested during the period 3,296 — (in thousands, except recognition period) December 31, 2021 December 31, 2020 Unamortized value of RSAs $ 4,715 $ 5,001 Weighted average amortization period (in years) 2.4 2.8 129 Table of Contents The following table presents information about the Company’s restricted stock activity: For the year ended December 31, 2021 2020 (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 341 $ 20.50 — $ — Granted 202 18.70 341 20.50 Vested ( 164 ) 20.15 — — Forfeited ( 7 ) 19.40 — — Unvested at end of period 372 19.62 341 20.50 Performance-based Restricted Stock Units On March 1, 2021, the Company granted 132,189 target PRSUs 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 Year Ended (in thousands, except recognition period) December 31, 2021 Compensation cost $ 743 December 31, 2021 Unamortized value of PRSUs $ 1,931 Weighted average amortization period (in years) 2.2 The were no PRSUs at December 31, 2020 and 2019. The following table presents information about the Company’s PRSU activity: For the Year Ended December 31, 2021 (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Unvested at beginning of period — $ — Granted 132 24.40 Vested — — Forfeited ( 22 ) 24.40 Unvested at end of period 110 24.40 130 Table of Contents 16. Earnings per Share The following table summarizes the components used in the calculation of basic and diluted earnings per share (“EPS”): For the Year Ended December 31, (in thousands, except per share amounts) 2021 2020 2019 Basic earnings: Net earnings attributable to Broadstone Net Lease, Inc. common shareholders $ 102,426 $ 51,181 $ 79,394 Less: earnings allocated to unvested restricted shares ( 394 ) ( 131 ) — Net earnings used to compute basic earnings per common share $ 102,032 $ 51,050 $ 79,394 Diluted earnings: Net earnings used to compute basic earnings per share $ 102,032 $ 51,050 $ 79,394 Net earnings attributable to non-controlling interests 7,102 5,095 5,720 Net earnings used to compute diluted earnings per common share $ 109,134 $ 56,145 $ 85,114 Weighted average number of common shares outstanding 153,425 117,289 95,917 Less: weighted average unvested restricted shares (a) ( 368 ) ( 139 ) — Weighted average number of common shares outstanding used in basic earnings per common share 153,057 117,150 95,917 Effects of restricted stock units (b) 172 — — Effects of convertible membership units (c) 10,741 11,649 6,948 Weighted average number of common shares outstanding used in diluted earnings per common share 163,970 128,799 102,865 Basic earnings per share $ 0.67 $ 0.44 $ 0.83 Diluted earnings per share $ 0.67 $ 0.44 $ 0.83 (a) Represents the weighted average effects of 372,150 and 340,963 unvested restricted shares of common stock as of December 31, 2021 and 2020, 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 15). (c) Represents the weighted average effects of 10,323,206 , 11,398,438 , and 6,948,185 OP Units outstanding at December 31, 2021, 2020, and 2019, 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. 17. Income Taxes For federal income tax purposes, distributions to stockholders are characterized as ordinary dividends, capital gain distributions, or return of capital distributions. Return of capital distributions will reduce stockholders’ basis in their 131 Table of Contents shares, but not below zero. The portion of the distribution that exceeds the adjusted basis of the stock will be treated as gain from the sale or exchange of property. The following table shows the character of the distributions the Company paid on a percentage basis: For the Year Ended December 31, Character of Distributions 2021 2020 2019 Ordinary dividends 61 % 89 % 43 % Capital gain distributions 0 % 7 % 8 % Return of capital distributions 39 % 4 % 49 % 100 % 100 % 100 % 18. Supplemental Cash Flow Disclosures Cash paid for interest was $ 57.3 million, $ 72.6 million, and $ 76.4 million for the years ended December 31, 2021, 2020, and 2019, respectively. Cash paid for income taxes was $ 0.6 million, $ 1.5 million, and $ 2.1 million for the years ended December 31, 2021, 2020, and 2019, respectively. The following are non-cash transactions and have been excluded from the accompanying Consolidated Statements of Cash Flows: • During the year ended December 31, 2021, the Company converted 2,934,489 OP Units valued at $ 47.0 million to 2,934,489 shares of common stock. During the year ended December 31, 2020, the Company converted 822,745 OP Units valued at $ 15.6 million to 822,745 shares of common stock. (See Note 12). • At December 31, 2021, 2020, and 2019, dividend amounts declared and accrued but not yet paid amounted to $ 45.9 million, $ 39.3 million, and $ 12.2 million, respectively. • At December 31, 2021, 2020, and 2019, the Company adjusted the carrying value of Non-controlling interests to reflect their share of the book value of the OP by $ 32.2 million, $( 41.2 ) million, and $ 5.8 million, respectively, with the reallocation recorded as an offset to Additional paid-in capital (see Note 2). • During the years ended December 31, 2020, and 2019, the Corporation issued 275,271 , and 3,012,052 shares, respectively, of common stock with a value of approximately $ 5.7 million, and $ 63.0 million, respectively, under the terms of the DRIP (see Note 14). • During the year ended December 31, 2020, the Company issued shares of Common Stock and OP Units, with a total value of approximately $ 178.5 million, and earnout consideration with a fair value of $ 40.1 million as consideration for the Internalization and assumed $ 90.5 million of debt (see Note 4). • During the year ended December 31, 2020, the Company adjusted the carrying value of mezzanine equity non-controlling interests by $ 2.5 million, with an offset to Additional paid-in capital, in accordance with our accounting policy (see Note 2). • During the year ended December 31, 2020, the Company reclassified $ 112.7 million of mezzanine equity non-controlling interests to Non-controlling interests as a result of the IPO triggering permanent equity classification (see Note 2 and 4). • During the year ended December 31, 2020, the Company reclassified $ 66.4 million of mezzanine equity common stock, with an offset of $ 66.4 million to Additional paid-in capital as a result of the IPO triggering permanent equity classification (see Note 2 and 4). • During the year ended December 31, 2020, the Company reclassified $ 30.8 million of the carrying value of the earnout liability, with an offset of $ 19.4 million as a component of Non-controlling interests and $ 11.4 million as a component of Additional paid-in capital (see Note 2). 132 Table of Contents • During the year ended December 31, 2020, the Company executed lease modifications that resulted in the lease classification changing from direct financing lease to operating lease for five properties. At the modification date, the net investment in the original lease, and therefore the carrying value of the assets recognized, amounted to $ 10.8 million. • Upon adoption of ASC 326 on January 1, 2020, the Company recorded a transition adjustment to record a provision for credit losses associated with its net investment in direct financing leases of $ 0.3 million, with an equal amount recorded as a reduction in retained earnings. The provision for credit losses is included as a component of Accounted for using the direct financing method on the Consolidated Balance Sheets. • Upon adoption of ASC 842 on January 1, 2019, the Company recorded right-of-use assets of $ 1.7 million and lease liabilities of $ 1.3 million associated with ground leases where it is the lessee. • In connection with real estate transactions conducted during the year ended December 31, 2020, the Company accepted credits for rent in advance of $ 1.7 million in exchange for a reduction to the cash paid to acquire the associated real estate assets. In connection with real estate transactions conducted during the year ended December 31, 2019, the Company assumed tenant improvement allowances of $ 2.5 million in exchange for a reduction to the cash paid to acquire the associated real estate assets. 19. 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 December 31, 2021, 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 Consolidated Financial Statements. Based on values as of December 31, 2021, taxable sales of the applicable properties would trigger liability under the agreements of approximately $ 22.3 million. Based 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. 133 Table of Contents 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. Obligations Under Operating Leases Subsequent to the Internalization, the Company leases office space for its corporate headquarters and other locations under non-cancellable operating leases with expiration dates ranging from 2022 to 2023 . These leases contain provisions for fixed monthly payments, subject to rent escalations. None of the leases are subject to any sublease agreement. The Company also leases land at certain properties under non-cancellable operating leases (“ground leases”) with initial lease terms ranging from 2034 to 2069 . These leases contain provisions for fixed monthly payments, subject to rent escalations. One lease requires the Company to make annual rent payments calculated based upon sales generated at the property (“percentage rent”). None of the leases are subject to any sublease agreement. The following table summarizes the total lease costs associated with operating leases: For the Year Ended December 31, (in thousands) Financial Statement Presentation 2021 2020 2019 Operating lease costs Office leases General and administrative $ 623 $ 517 $ — Ground leases Property and operating expense 149 133 139 Variable lease costs Ground leases Property and operating expense 62 61 46 Total lease costs $ 834 $ 711 $ 185 The following table summarizes payments associated with obligations under operating leases, reported as Net cash provided by operating activities on the accompanying Consolidated Statements of Cash Flows: For the Year Ended December 31, (in thousands) 2021 2020 2019 Operating lease payments $ 804 $ 666 $ 158 Estimated future lease payments required under non-cancelable operating leases at December 31, 2021, and a reconciliation to the lease liabilities, is as follows: (in thousands) 2022 $ 723 2023 539 2024 153 2025 155 2026 157 Thereafter 3,620 Total undiscounted cash flows 5,347 Less imputed interest ( 2,777 ) Lease liabilities $ 2,570 The above rental payments include future minimum lease payments due during the initial lease terms. Such amounts exclude any contingent amounts associated with percentage rent that may become due in future periods. 134 Table of Contents 20. Subsequent Events On January 14, 2022, the Company paid distributions totaling $ 45.8 million. On February 17, 2022, the Board of Directors declared a quarterly distribution of $ 0.265 per share on the Company’s common stock and OP Units for the first quarter of 2022, which will be payable on or before April 15, 2022 to stockholders and unit holders of record as of March 31, 2022 . Subsequent to December 31, 2021, the Company continued to expand its operations through the acquisition of additional rental property and associated intangible assets and liabilities. The Company acquired approximately $ 25.6 million of rental property and associated intangible assets and liabilities (see Note 5). On January 28, 2022, the Company amended and restated the Revolving Credit Agreement to increase the available borrowings to $ 1.0 billion and extend the maturity date to March 31, 2026 . In addition to United States Dollars, borrowings under the Revolving Credit Agreement can be made in Pound Sterling, Euros or Canadian Dollars up to an aggregate amount of $ 500.0 million. Borrowings under the agreement 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 %. The applicable margin is 0.850 % per annum. In addition, the Revolving 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. Subsequent to December 31, 2021, the Company paid down $ 17.0 million, and borrowed $ 37.0 million on the Revolving Credit Facility, the proceeds of which were used to fund acquisitions and for other general corporate purposes. Through February 22, 2022, the Company issued 1,051,000 shares of common stock at a weighted average sale price of $ 24.10 per share under the ATM Program. The net proceeds, after deducting $ 0.4 million of commissions and other offering costs, were $ 25.0 million. 135 Table of Contents Broadstone Net Lease, Inc. and Subsidiaries Schedule III – Real Estate Assets and Accumulated Depreciation As of December 31, 2021 (in thousands) Initial Costs to Company(A) Costs Capitalized Subsequent to Acquisition Gross Amount at Which Carried at Close of Period Accumulated Depreciation Date of Construction Date Acquired Life on Which Depreciation is Computed (Years) Property Type Encumbrance Land Buildings and Improvements Land Improvements Land Buildings and Improvements Total(B) Industrial Manufacturing $ — $ 111,511 $ 487,861 $ — $ 9,087 $ 111,511 $ 496,948 $ 608,459 $ 59,597 1932-2021 2011-2021 15 - 39 Distribution & Warehouse 7,500 95,356 565,182 4,511 1,834 99,867 567,016 666,883 50,798 1929-2021 2012-2021 15 - 39 Food Processing 6,249 24,668 264,695 — 2,700 24,668 267,395 292,063 27,827 1907-2020 2012-2021 15 - 39 Flex and R&D 46,760 57,118 155,150 — 4 57,118 155,154 212,272 18,130 1982-2018 2013-2019 15 - 39 Cold Storage 19,557 11,638 154,542 — 68 11,638 154,610 166,248 17,375 1933-2017 2017-2018 7 - 39 Services — 51,531 40,327 — 3,680 51,531 44,007 95,538 4,156 1960-2020 2013-2021 15 - 39 Healthcare Clinical — 31,837 273,566 557 10,182 32,394 283,748 316,142 47,300 1970-2018 2010-2021 15 - 39 Healthcare Services — 21,160 137,863 ( 145 ) 508 21,015 138,371 159,386 9,900 1982-2020 2009-2021 15 - 39 Animal Health Services — 15,943 111,107 — ( 635 ) 15,943 110,472 126,415 11,404 1954-2017 2015-2021 15 - 39 Surgical — 9,942 117,006 290 135 10,232 117,141 127,373 16,401 1984-2011 2014-2021 15 - 39 Life Science — 10,306 78,056 — 1,212 10,306 79,268 89,574 12,550 1965-2016 2011-2018 15 - 39 Untenanted — 251 3,821 — 1 251 3,822 4,073 343 2006 2018 15 - 39 Restaurant Quick Service Restaurants — 49,683 239,382 197 3,650 49,880 243,032 292,912 42,108 1965-2020 2009-2020 15 - 39 Casual Dining — 36,120 222,836 — 12 36,120 222,848 258,968 34,062 1972-2014 2011-2021 15 - 39 Retail General Merchandise 17,094 61,833 198,862 — 17 61,833 198,879 260,712 11,839 2003-2019 2016-2021 15 - 39 Automotive — 32,460 121,643 — 18 32,460 121,661 154,121 17,629 1909-2019 2014-2021 7 - 39 Home Furnishings — 3,625 90,644 — 5 3,625 90,649 94,274 11,548 1974-2014 2017-2018 15 - 39 Untenanted — 63 2,152 — — 63 2,152 2,215 83 1991 2017 15 - 39 Office Corporate Headquarters — 13,027 95,721 — 1,810 13,027 97,531 110,558 10,836 1965-2008 2012-2021 15 - 39 Strategic Operations — 7,723 90,130 — 8,858 7,723 98,988 106,711 14,577 1984-2012 2016-2017 7 - 39 Call Center — 4,169 45,814 — 10,228 4,169 56,042 60,211 11,678 1979-2001 2010-2019 15 - 39 Acquisitions in Process (C) — — 83 — — — 83 83 — Total (D) 97,160 649,964 3,496,443 5,410 53,374 655,374 3,549,817 4,205,191 430,141 Notes: (A) The initial cost to the Company represents the original purchase price of the property (see Note 5). (B) The aggregate cost of real estate owned as of December 31, 2021 for U.S. federal income tax purposes was approximately $ 4.4 billion. (C) Acquisition costs in progress represents costs incurred during the year ended December 31, 2021 related to asset acquisitions expected to close during the year ended December 31, 2022. (D) This schedule excludes properties subject to leases that are classified as direct financing leases, sales-type leases, as well as the value of right-of-use assets recorded on certain of the properties where the Company is lessee under a ground lease. 136 Table of Contents Change in Total Real Estate Assets For the Year Ended December 31, 2021 2020 2019 Balance, beginning of period $ 3,704,488 $ 3,686,444 $ 2,848,735 Acquisitions and building improvements 613,646 108,868 984,760 Dispositions ( 109,761 ) ( 69,941 ) ( 143,688 ) Impairment ( 3,182 ) ( 20,883 ) ( 3,363 ) Balance, end of period $ 4,205,191 $ 3,704,488 $ 3,686,444 Change in Accumulated Depreciation For the Year Ended December 31, 2021 2020 2019 Balance, beginning of period $ 349,977 $ 271,044 $ 206,989 Acquisitions and building improvements 100,878 93,741 83,797 Dispositions ( 19,543 ) ( 12,369 ) ( 19,317 ) Impairment ( 1,171 ) ( 2,439 ) ( 425 ) Balance, end of period $ 430,141 $ 349,977 $ 271,044 1 3 7 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.