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Hello, and welcome to Broadstone Net Lease's Fourth Quarter 2025 Earnings Conference Call. My name is Emily, and I'll be your operator today. Please note that today's call is being recorded. I will now turn the call over to Brent Maedl, Director of Corporate Finance and Investor Relations at Broadstone. Please go ahead.

Thank you, everyone, for joining us today for Broadstone Net Lease's Fourth Quarter 2 Earnings Call. On today's call, you will hear prepared remarks from Chief Executive Officer, John Moragne, President and Chief Operating Officer; Ryan Albano; and Chief Financial Officer, Kevin Funnell. All 3 will be available for the Q&A portion of this call. As a reminder, the following discussion and answers to your questions contain forward-looking statements, which are subject to risks and uncertainties that can cause actual results to differ materially due to a variety of factors. We caution you not to place undue reliance on these forward-looking statements. For a more detailed discussion of risk factors that may cause such differences, please refer to our SEC filings, including our Form 10-K for the year ended December 31, 2025, and note that such risk factors may be updated in our quarterly SEC filings. Any forward-looking statements provided during this conference call are only made as of the date of this call. With that, I'll turn the call over to John.

Thank you, Brent, and good morning, everyone. Before I dive into our results and outlook, I want to briefly reflect on what we accomplished in 2025 because I believe it was an important year in Broadstone's history. 2025 was pivotal in terms of proving out the promise of this company and our strategy. and was crucial in terms of establishing a strong foundation for B&L's future. We successfully executed our Investor Day and used it to reinforce who we are as a company and why we believe our differentiated strategy is built to generate consistent and attractive long-term shareholder value. Delivering on our strategic objectives last year required significant effort across the entire organization, and I couldn't be prouder of what our team accomplished. As a reminder, our strategy continues to be driven by our 3 core building blocks: First, solid in-place portfolio performance, anchored by our top-tier contractual rent escalations, same-store growth potential and revenue-generating CapEx; second and most importantly, a laddered pipeline of committed build-to-suit development projects that provide attractive yields, value creation and derisk future AFFO per share growth; and third, stabilized acquisitions, including sale leasebacks and lease assumptions particularly those that are directly sourced and relationship-based that supplement and enhance our built-in growth profile. In 2025, we made meaningful progress across each of these building blocks. And as we look ahead, we believe our build-to-suit strategy will provide meaningful embedded long-term growth and value creation. With high-quality mission-critical facilities with attractive economics and high-quality tenants, our portfolio and pipeline provide a powerful driver of durable growth that is unique within the net lease space. With our differentiated strategy established and our team firing on all cylinders, we delivered a strong year on all fronts, including generating $1.49 of AFFO per share, representing 4.2% growth year-over-year. We also maintained solid portfolio performance ending the year 99% leased and 99.8% of rents collected. We also incrementally disposed of some of our remaining legacy clinical health care assets, and we continue to tightly manage expenses and grow cash flows. On the investment side, we deployed $748.4 million, including $429.9 million in new property acquisitions, $209.3 million in build-to-suit developments, $100.8 million in transitional capital and $8.3 million in revenue-generating capital expenditures. The new property acquisitions and revenue-generating capital expenditures had a weighted average initial cash capitalization rate of 7%, a weighted average remaining lease term of 14.2 years and weighted average annual rent increases of 2.6%, providing contractual growth that is 50 basis points above our portfolio average. On a weighted average basis, these investments also carried a straight-line yield of 8.4%, reflecting attractive growth-oriented returns while extending the duration and embedded rent growth profile of our portfolio. Alongside our investments, we also successfully navigated multiple headline tenant situations throughout the year, and I want to give our team all the credit here. These situations require a lot of work, and our organization has tangible tested experience in managing them to completion. Our team brings a creative and solutions-oriented mindset to find outcomes that work for us and our tenants. It's the ability to find mutually beneficial solutions to difficult problems that helps us build long-term relationships with our tenants and clients. which you hear us talk about often. Despite the headlines, the actual financial impact from tenant situations last year was limited with bad debt for 2025, amounting to only 31 basis points. That outcome underscores the strength and reliance of our portfolio as well as our team's ability to manage through these events and should serve as a reminder that while credit events are bound ahead. In most cases, the underlying impact on the business is minimal and does not necessitate the outsized swings in our share price that we have experienced historically. A recent example of this disconnect was when American Signature filed for bankruptcy over a weekend in November last year, a filing that was not communicated to us in advance. In response, our share price declined over 5%, representing approximately $150 million of market capitalization despite American Signature representing only approximately 1% of our total ABR. As you saw in our earnings release last night, through the court supervised process, Gartner White Furniture has assumed all 6 of our American Signature leases at current rents effective as of February 6. We realized no bad debt throughout the process, and we now have a strong retail furniture operator in all 6 of our locations with what we expect will eventually be a new and structurally improved long-term lease. Overall portfolio performance remains solid, and our credit and underwriting platform, paired with our proactive relationship-based focus allows us to stay close to our tenants and anticipate issues early. We've also been intentional about communicating potential tenant concerns as transparently and as early as possible. With that backdrop, we want to provide an update on what we are seeing across our Red Lobster sites. The tenants post-bankruptcy operating performance has been mixed. With its turnaround strategy positively impacting some sites, while others have experienced weaker traffic and profitability. We are monitoring this closely and remain in active dialogue with Red Lobster while we continuously assess each of our sites to understand our highest value pathways forward, which could simply mean maintaining the status quo. Given the continued underperformance at some of our sites, however, we are in the process of evaluating potential mutually beneficial 4 sale or 4 lease paths that could reduce our exposure to the brand over time. We remain highly confident in our ability to navigate our exposure to Red Lobster as we have proven with this and other distressed tenants time and time again. Turning to 2026. And as we previously outlined in connection with our Investor Day, we are reiterating our 2026 AFFO guidance of $1.53 to $1.50 per share or 4% at the midpoint. Kevin will walk you through our key guidance assumptions in his remarks. But I think it's worth reminding everyone that the success we had in 2025 and establishing our build-to-suit pipeline provides for a very strong foundation for 2026. The incremental investment activity required to achieve our 2026 guidance targets is relatively insignificant. And our primary focus on our investment committee conversations centers around what we are seeing that will deliver in 2027. We remain in a great position to start the year with approximately $350 million of high-quality build-to-suit developments scheduled to reach stabilization during 2026, adding nearly $26 million of incremental ABR. Additionally, we have approximately $142 million of additional build-to-suit developments that are under executed LOIs consistent with what was previously provided in conjunction with our Investor Day. We are also excited about some opportunities to continue to add to our transitional capital bucket. As many of you have been focused on since our third quarter earnings call and from our Investor Day presentation, our transitional capital investment in Project Triboro is top of mind and we have now invested approximately $100 million in the project through December 31. As I've said previously, we are very excited about this project, and we intend to use 2026 to evaluate all available paths for this investment opportunity, while staying actively involved in the development work to preserve optionality and ensure we maximize value for shareholders. Ryan will provide more details on Project Triboro in a few moments. Finally, while we have been encouraged by improving market sentiment around REITs and some improvement in our equity multiple, we remain frustrated with our relative valuation. We continue to focus on disciplined execution to close the remaining gap versus our peer average and expand our ability to fund growth opportunities over time. As you saw in our earnings release last night, we raised a small amount of equity under our ATM since November. In total, on a forward basis, we have raised gross proceeds of approximately $43 million. While the market setup has been incrementally constructive, we do not expect to raise significant amounts of additional equity at these levels. So we will remain opportunistic in our decision-making. As we have made clear over the last 3 years, we will control our own destiny and look to opportunistic dispositions and alternative opportunities for capital when we do not believe the equity markets are properly valuing our shares. That being said, we know that publicly traded net lease REITs like B&L work best when they are in the virtuous cycle and raising accretive equity capital to be redeployed into attractive investments, and we look forward to the day when we're able to consistently raise equity in that manner again. As I said at the beginning of my remarks, I couldn't be prouder of what our team accomplished in 2025, and I look forward to sharing with you all that we will accomplish in 2026. With that, I will hand the call over to Ryan and Kevin to take you through some of these themes in greater detail.

Thank you, John, and thank you all for joining us today. As John mentioned, 2025 marked a pivotal year for the strategic road map implemented following the executive team transition in early 2023. Our differentiated approach in core building blocks are firmly established, supporting robust growth in 2025 and enabling visibility into embedded growth through 2027, well ahead of most net lease companies. . Over the course of the year, we had approximately $4.5 million of ABR commenced from build-to-suit projects, featuring weighted average annual rent escalations of 2.9% and a weighted average lease term of 15 years, further strengthening our robust portfolio metrics. Furthermore, our UNFI build-to-suit project, which began generating rent in late 2024, contributed a full year of ABR during 2025. At present, we have 9 in-process developments, representing an estimated total project investment of $345 million. These projects offer strong estimated initial cash yield of 7.4% and estimated weighted average straight-line yield of 8.6%, driven by weighted average lease term and annual rent escalations of 12.9 years and 2.7%, respectively. Notable, these tenant-driven projects are structured to mitigate traditional development risks such as construction timing and cost pressures. Of equal importance, our pipeline building methodology serves as a strategic differentiator. We primarily source opportunities through existing and direct relationships facilitating repeat transactions and expanding access to new investment opportunities. Our development partners value certainty of execution, expertise, creativity and flexibility while assisting them in securing investment opportunities and advancing their businesses, setting us apart in the market. Aligned with our Investor Day announcement on December 2, we maintain approximately $142 million in advanced stage projects under executed LOIs, sustaining a pipeline that supports our target of $350 million to $500 million in committed build-to-suit projects for the foreseeable future. In 2025, while focusing on developing our initial build-to-suit pipeline, we also pursued stabilized acquisitions primarily through direct sourcing efforts. We invested approximately $430 million in new property acquisitions, achieving initial cash yields of 7% and strong weighted average rent escalations of 2.6%, resulting in straight-line yield of 8.4%. Regarding the transaction market, we observe healthy activity, including some notable portfolio opportunities, especially within the industrial property segment. However, we remain disciplined. In many cases, pricing levels do not align with our targeted risk-adjusted returns, and we refrain from prioritizing volume over quality. We continue to exercise caution regarding tenant credit, considering broader economic conditions and sector-specific constraints. Consequently, we prioritize opportunities involving strong relationships and investment structures that protect downside risk, whether via our build-to-suit platform, revenue-generating capital expenditures or stabilized property acquisitions. Turning to dispositions. We sold 28 properties in 2025, yielding gross proceeds of $96 million at an average cash cap rate of 7.3% on tenanted properties. These transactions were primarily focused on routine portfolio sales and risk mitigation efforts, including the sale of Stanislaus Surgical, which further reduced our exposure to nonreimbursable expenses associated with clinical assets. Now focusing on our in-place portfolio. We completed 19 lease rollovers during the year, addressing over 1% of the total portfolio ABR. This resulted in a weighted average recapture rate of 110% at an average new lease term exceeding 7 years. For 2026, 3.3% of our in-place ABR is scheduled for rollover with negotiations already underway and positive outcomes anticipated. Regarding our watch list, our team successfully managed key tenant events in 2025, including positive outcomes with At Home, Claire's and

Thank you, Ryan. During the quarter, we generated adjusted funds from operations of $75.8 million or $0.38 per share, a 5.6% increase over Q4 of 2024. For the full year, we generated $296.3 million or $1.49 per share, a 4.2% increase year-over-year, driven by strong same-store rent growth of 2% and approximately $430 million in stabilized investment activity throughout the year. The year's results also benefited from lower nonreimbursable property expenses from re-leasing activity that occurred at the end of 2024 and lower carrying costs from health care-related dispositions that occurred at the beginning of 2025. Lost rent totaled 31 basis points for the year, down from 67 basis points during 2024. Core G&A was well managed once again during the year, with expenses totaling $7 million during the fourth quarter and $28. 7 million for the full year, down 2% year-over-year. These were partially offset by higher interest expenses associated with our revolving credit facility driven by an increase in acquisitions activity. With respect to the balance sheet, we ended the year with pro forma leverage of 5.8x, approximately $11 million of unsettled equity and over $700 million available on our revolver. In December, we amended our bank term loans, resulting in a 10 basis point reduction to each of the loans all in rates, and an incremental 25 basis point reduction to the 2029 term loan rate. We also amended the 2029 term loan maturity date, providing a fully extended maturity into February 2031. With limited debt maturities through 2027, we maintain sufficient financial flexibility as we look ahead. Regarding the capital markets more generally, our posture remains opportunistic. Example of what you saw with our $350 million September bond issues. More recently, our decision to issue a small amount of new shares via the ATM was similarly situated as we evaluate our robust pipeline of investment opportunities and approach rent commencement on a number of our build-to-suit projects. Including incremental sales after year-end, we currently have approximately $43 million in unsettled equity that we expect to sell at the end of the year. As John alluded to, we are not interested in raising equity and significant scale at these levels, and we'll look to self-fund our investments if or as needed. Last week, our Board of Directors approved a quarterly dividend of $0.2925 per share, representing a $0.25 or approximately a 1% increase over the prior dividend. The dividend is payable on or before April 15, 2026, to shareholders of record as of March 31, 2026. This increase reflects our return to growth in 2025 and visibility to additional growth in 2026 and 2027, and we are excited to be in a position to translate that momentum into dividend growth while continuing to target a mid-70% payout range at the end of 2026. We are reiterating our 2026 per share guidance range of $1.53 to $1.57 per share with the following key assumptions: investment volume between $500 million and $625 million. disposition volume between $75 million and $100 million. And finally, core G&A between $30 million and $31 million, revised down from $30.5 million to $31.5 million in our initial guide given better-than-expected core G&A for 2025 and our continued success in managing these expenses. As previously mentioned, we also include 75 basis points of lost rent with our 2026 guidance and we'll revisit this assumption throughout the year. It's always worth reminding everyone that our per share results for the year are sensitive to the timing, amount and mix of investment and disposition activity as well as any capital market activities that may occur during the year. Please reference last night's earnings release for additional details, and we will now open the call for questions.

[Operator Instructions] Our first question today comes from Anthony Paolone with JPMorgan.

My first question relates to just the competitive landscape for build-to-suit opportunities. We've seen since you all have ramped this up a couple of the net lease name also lean into that strategy. I'm just wondering if you're starting to see any more competition or others enter into the space.

Invitation certainly is the sincere form of flattery, right? We're pleased to see that others are finding the same value in build-to-suits that we do. That being said, we have not seen an increase in the level of competition on the deals that we're looking at. And that goes to what Ryan was discussing in his remarks, the relationship-based nature of the way that we source our deals. . Our goal is to find partners who are looking to help us grow our business where we're helping them grow theirs. And so in the same way that we look for mutually beneficial solutions to tenant issues. We're also looking for mutually beneficial relationships on the build-to-suit side. So by contrast, we've actually seen a big uptick in the amount of build-to-suit activity that had come across our teams desks, particularly in the last 10 days of new opportunities that we're excited about with potential completions in 2027 and even out into 2028. So certainly more attention and activity in the area, but it's not impacting the top of our funnel or the way that we're able to source deals that we'll be able to add to our pipeline over time.

Okay. And then just my second question relates to Project Triboro. You mentioned maybe an initial delivery in 3Q '27 for power. Like how much of the 1 gigawatt would that be? I mean the gigawatt is a lot, and it seems like the capital investments could be quite sizable. And so just trying to get a little bit more context around that time line and what that means?

Sure. I'd say it's a little too early to tell. We are looking at different load ramps in talking with PPL about it, I would say that when we think about the power, we really kind of think about it in 2 phases, and the first phase is 300 megawatts. And the second phase takes you up to the gigawatt. It would likely be some portion of that initial 300 megawatts and probably somewhere over 100.

Our next question comes from Eric Borden with BMO Capital.

You talked about different types of capital sources that you may potentially be using in 2026. One of those was the potential opportunity to recycle assets. I just want to talk about UNFI. If you were to sell UNFI today, how would you expect to deploy those proceeds? Would it be towards traditional acquisitions or funding new developments? And then additionally, how are you guys thinking about the potential leverage implications if the proceeds were used to fund new development activity?

Sure. couple of questions, I guess, to answer. The first is UNFI as a capital source most optimally later this year as that becomes more tax efficient. So as you think about. Your question on use of proceeds, I think there's a timing component to introduce as well. And so we think about all the dollars we're deploying, our commitment in the build-to-suit is sort of a known number today. It will grow over time. And similarly related, we've got a lower target for stabilized acquisitions. And so I'd say, it's less about the mix of the deployment dollars and more about the timing of those dollars is the first answer. And then second, on leverage, you've heard us the last couple of quarters, especially get really comfortable talking about our sustained target of 6x on a pro forma basis. I think with where we're trading today, we're still dancing around those levels and evaluating what that next capital source is. And to the extent that its equity, it certainly helps the leverage equation. To the extent is a dispo, you sort of maintain that leverage target where it is. So a little bit more to come as the year plays out, but intend to be opportunistic and maintain that level of flexibility.

Okay. And then just on internal growth. I understand you don't provide like formal same-store revenue guidance, but how should we be thinking about internal growth for '26 and beyond is that 2% annual growth rate, a reasonable run rate assumption for B&L?

Sure. I think that's reasonable. I mean you'll see, particularly these disclosures come out quarterly, maybe a little bit of upper momentum around that number, but we look back historically, when we started to disclose this information and for probably 8 or 9 quarters relying on that 2% as a go-forward assumption is reasonable, and then you'll see us move around that and really move that higher over time. .

Our next question comes from Upal Rana with KeyBanc.

On Red Lobster, I understand all 18 sites were under a long-term single master lease. Just wondering how many of your sites are under consideration to either sell or re-lease? And how that impacts the master lease itself? And if there could be some terminations coming in there as well?

Early days in this discussion. We've been, as you've heard us say before, we've reduced our exposure to Red Lobster over the years. We originally had 25 sites were down to 18. We've been interested in reducing the 18 even further, but that was held back by the bankruptcy process, you weren't in a place where you'd be able to reduce it further. We've been actively looking to do that for a while now. . We're having good productive conversations, but hit a theme over the head multiple times. We are looking for mutually beneficial solutions here. We want to be able to help Red Lobster in their efforts to improve. These sites were performing well on an aggregate basis prior to the bankruptcy. The bankruptcy unfortunately, has had a pretty harsh impact on foot traffic, although Red Lobster CEO was recently interviewed in the Wall Street Journal and talked about 10% increases in brand-wide sales, 18% increases in placer data from a foot traffic standpoint. So there has been some recovery, not to the pre-bankruptcy levels. we are currently below that 2x rent coverage where we were prior to the bankruptcy. We have seen efforts that they've had in terms of cutting costs and changing up their market strategy. They've had some success with some of those things and particularly attracting young people back to the brand. So we're hopeful that we'll continue to see that. We're open to ideas for re-leasing, moving on from some of the sites, selling them, working with them to improve here. but it has to be something that's mutually beneficial and is helpful to us in our efforts to continue to grow our AFFO per share and not take a big at that is otherwise unwarranted. So early innings, not sure that we'll see any real movement here in the near term, but we'll continue to have conversations and keep an open mind.

Okay. Great. That was helpful. And then on American Signature, I know you're still negotiating a new master lease there. What do you think rents could potentially end up relative to the current rents? And how does this impact the bad debt that you have embedded into full year guidance?

No change. Rents will stay what they were when we win. We're not negotiating a change in those rent levels. The only thing that we're looking at right now is a handful of small lease issues, including consolidating the individual leases into a master lease as you referenced.

Okay. And then the bad debt portion for maximizer for this year?

No change in our assumptions on it. we take a conservative position early in the year with the things that we're looking at. And as Kevin said, we'll revisit that over the course of the year. So if we continue to do as well as we have historically, you'll see that 75 number come down. I mean we were 31 basis points last year, 67 the year before, '24 and '23, and 3 in '22. So our bad debt experience on an actual incurred basis is substantially below what our reserve is.

The next question comes from Caitlin Burrows with Goldman Sachs.

On the build-to-suit pipeline today and for the future, it sounds like you're targeting to announce and complete $350 million to $500 million of projects per year going forward. So I guess, first, is that right? And then can you give any detail on your pipeline of unannounced build-to-suit projects today maybe versus a year ago? And what portion is new versus repeat business?

So the $350 million to $500 million, we think of it as more of like a rolling target. That's how much we'd like to have in the active development stage at any particular point. starts may vary year-to-year depending on what we started the prior year and what we have sort of in the hopper for active developments. So a little bit of a nuance there, but essentially $350 million to $500 million on a rolling basis, which is where we sit today. with what we have under LOI. It's almost entirely a repeat business, either from a developer or from a tenant standpoint. So folks that we have worked with in some capacity previously. There is one new project in there. We started a new academy sport after our Investor Day at the end of December. We actually started another Academy Sport deal yesterday. And then we have 2, a little bit larger industrial deals that we expect to start here in Q1 that we should have an announcement out about shortly when those are finished up.

Got it. Okay. And then maybe back to Claire. So totally hear you guys on how bad debt has come out relatively attractive over the past few years. You mentioned that you're now expecting or they did exercise their lease termination right for you in 2026. So just wondering what your current expectation is maybe what's assumed in guidance for -- is there a lease termination fee there or maybe not because of the bankruptcy history and then expectation on re-leasing versus selling and what you're seeing kind of in terms of those options right now?

Yes, you're right. There's no termination fee because of the bankruptcy history there. So they exercise the right, they'll walk away under the current structure at the end of June. We know they're in the process of negotiating for new space a little bit further down on I-90, but that hasn't been finalized yet. So this is still a little bit up in the air. But we're working under the assumption that the property will be vacant on June 30, and we're looking to re-lease it or sell it on July 1. And we've had some good discussions so far with potential counterparties on it, so we're fairly confident. And then any impact from that has already been baked into our view from a guidance standpoint and our view of bad debt for the year. So no change in the way that we would think about the performance over the course of the year relative to Carson.

Our next question comes from Ronald Kamdem with Morgan Stanley.

Just two quick ones. Going back to Project Triboro. I guess, when do you think the Domino's fall in place that you could have a sort of a tenant in hand, willing to take the space. Does that make sense? Like what more do you need to do on your end? And when do you get to the point where you can have a tenant committing to that project?

Sure. I'd say as we're looking at it, the real 2 focal points right now, or I guess I'd say 3 are zoning, which we expect in the near term second being sort of power ongoing conversations with PPL, really working out sort of T&D line paths to the site, their substation, our substation. So significant progress there. And then overall, some say work that commenced in Q4, keep things sort of progressing from a time line perspective. So I would say that I think we'll officially be in market, looking for tenant and leasing activity in the fairly near term, I call it, first half of this year. But that said, that hasn't stopped folks from calling us. I think -- as well as I do, they're probably like 6 to 10 hyperscale companies that would be interested in the site, they know all these sites, especially those that are a gigawatt of power plus in the country. I don't need to really advertise it for them to find me. So they're calling, and -- but I think to your exact question, we'll be in market in the near term.

That's really helpful. My second question was just sort of, I guess, sort of a capital recycling question, right, in terms of, of course, you're not sort of forced seller of anything here, but given sort of the activity, given some of the market, does it make you want to sort of push more in sort of the noncore sales this year? And then as your sort of capital recycling that, can you just talk about cap rates and return trends both on the acquisition and the sort of build-to-suit side? Like are we seeing those hold? Are we seeing those compressed? Just any sort of high-level color would be helpful.

Sure, I'll take the capital recycling point and hand it back to John for the second. Look, I think with a lot of what's going on in the portfolio, particularly some recent lease renewals and whatnot, some legacy assets are incrementally more attractive. And so we have some interesting opportunities to think about older assets that have a different value equation today. So there's a source there. And then obviously, the sort of flush the equation lever is the build-to-suit. So the spectrum is quite wide in terms of which assets could be able. We're not forced sellers, we are opportunistic sellers and the trade needs to make sense. And so that range of outcomes when you pair that with some portfolio management probably puts you in a singular outcome of something in the mid-5s to, call it, into the 7s of a range of opportunity, and we'll look to wait that out certainly in the lower end of the spectrum. And so as we get through the year, you'll see us make those decisions and print those numbers. But accretive is the answer and ideally 100 basis points or better. So on the cap rate side, from a build-to-suit standpoint, we're continuing to find good opportunities in that on an upfront initial cash capitalization yield standpoint in the mid-7s down to the high 6s that then blends to a place in the low to mid-7s just like our existing pipeline. As Ryan mentioned, our existing pipeline is at 7.4% on the upfront cash yields and 8.6% on a straight line yield. So we're still continuing to find things in the build-to-suit that fit well within that, including being able to structure things in a creative way to drive the yields for our benefit when we're still helping our developers close on these projects and start new ones. Where we have seen a little bit of compression, and I'm sure you've all heard this, other places is particularly on larger portfolio deals and regular way acquisitions. There's been a handful of industrial food processing deals that have been out there that have traded at cap rates that haven't made a whole lot of sense to us given the overall risk-adjusted profile of those investments. We've been pleased to see that there was an uptick in overall traditional acquisition volume towards the end of 2025 and seeing that going into 2026 as well, not get back to sort of the pre 2023 levels in the same level, but it's been good to see more volume. But as I've been talking about for quarters and quarters now, the demand level for regular way deal flow, sale leasebacks and lease assumptions is significant. And so the dry powder and the demand that's out there is still continuing to put some pressure on those regular way cap rates, which makes us feel even better about our opportunity in the build-to-suit core vertical that we have and the success that we've been having.

The next question comes from Mitch Germain with Citizens Bank.

How should we think about the guidance for deployment, $500 million to $625 million. I mean, what do you consider to be the breakdown between the various diverse ways that you can allocate capital in that number?

Yes. Look, I think you saw it through last year as we were building this pipeline. You walk into 2026 and a bulk of the dollars slated for deployment this year are going to be related to the build-to-suit investments. Certainly, you've heard John say also the last year, especially that we're not interested in saying no to partners who are bringing us strong deals on a stabilized opportunity set. So the answer is both. But I'd say starting this year, it's definitely weighted towards build-to-suit dollars versus kind of the inverse last year.

Great. And then any competition that you're seeing -- increasing competition you're seeing on the traditional acquisition side?

For us, at least, it's just as high as it's been over the last 2 years. I think I've been sort of ringing the bell on the competition for a little while now. We've been in a place where supply-demand characteristics in that lease haven't really matched up for a while because of the steep drop that you saw in net lease transaction volumes in '23, '24, '25. . Thankfully, that's starting to change a little bit, and you're starting to see that number come up. So hopefully, it will leave you a little bit of the pressure, but we haven't seen that yet. There's been a huge amount of competition. And for us, as an industrial focus, net lease REIT in those industrial assets, they're a little bit chunkier when you can find a portfolio. They're very interesting, and it's a great way for particularly a lot of the private institutional net lease investors to deploy a lot of capital in a very short period of time. So it can sometimes drive a little bit more pressure on those cap rates.

The next question comes from Ryan Caviola with Green Street Advisors.

There's been a lot of noise in the political landscape because of the midterms. But have you seen any of the tailwinds from onshoring start to materialize over the last year, particularly on the industrial development demand front?

We've certainly seen in the build-to-suit pipeline. We've had lots of conversations with developer partners and with potential tenant clients who are all looking actively at ways in which they can bring more of their production capacity here in the United States or to sort of rework an existing logistical chain, you name it. So it's going to be slow going. These are not decisions that get made overnight. We see it often the conversion time line for a build-to-suit deal is much longer than a regular way deal because of the amount of work that has to go into it. going back from site selection, the entitlement process, permitting, working through the design build process, all of the various components that have to go in to make this work. It takes a long time to get there. So we're excited by the tailwind that we expect that will come from this effort to sort of onshore, nearshore, reshore or whatever, but it's going to take some time to build. But because we've already had so much success in building this strategy and in building the pipeline that we have today, we can be patient and wait for that to come, and we'll use that as a continued opportunity to build this out in the years to come.

Got it. Appreciate that. And then just a quick one on casual dining. Being mindful that Red Lobster challenges are mostly operator-specific. But what commentary have you heard from other casual dining tenants going into 2026, just on sector strengths and their appetite to expand? And is it a bucket that you'd want to add to in your portfolio? Are you kind of built up there?

It's -- I think you hit on it in your question, it's very operator and brand specific. There are casual dining brands that have struggled in recent years, Red Lobster being one of them. And there are other casual dining brands that have done exceptionally well. We've seen both of those in our portfolio with the Red Lobster exposure in years and Applebee's being 2 that have had a little bit of hard time. On the flip side, J. Alexander is a casual dining brand in our portfolio that is doing exceedingly well with coverage as well north of what we would want to see on a stabilized but on a regular basis. So it really depends, to your point on whether or not we would invest more, it would be very operator and brand specific. We are not actively looking at new casual dining as sort of a focused strategy. But the ones that come across our desk, we'll take a look at it. It's very easy to sort of make a quick decision on, all right, this is something that we would want to do or not. And it's far more of the latter than the former.

The next question comes from Michael Gorman with BTIG.

Maybe just one more on Project Triboro. Just trying to understand when you think about it, kind of we've seen the press reports about the land rush in the data center space. And I'm curious kind of what the incremental value had is from the site work that you're undertaking now versus just looking to be in the market for the raw land to the hyperscalers as it is right now. . And then maybe just the second point, how do you think about that in the terms of maybe some rising political headwinds around data center development or concerns about AI CapEx into the future and kind of the time line into 2027. So maybe you could just talk a little bit about how that plays out in your underwriting and thought process.

Sure. I think I can take this. John, feel free to jump in. I think there are several questions there. The first is sort of value creation and various milestones along the way from raw land through Powered wind. And then how hyperscalers sort of fit into the mix versus developers and typical real estate investors. I would say that there is certainly value creation we're seeing it kind of play out and some of the unsolicited offers that have come through. When we think about what our invested capital is to date in the project versus the level at which the office are coming in are coming in, in line with what we'd expect from a power land perspective. So certainly significantly higher than our invested capital to it. A lot of it really focuses on the time and quantum of power delivery. And sooner rather than later is obviously more valuable. Hyperscalers are certainly competitive in the mix, trying to get in at earlier stages from a land perspective. Like I had mentioned sort of in my other remarks that this is in sight that needs to be highly advertised. They know it's there, they know it's a gigawatt of power and they're certainly circling on it. So I'd say that they although attempted to get in earlier, we just happen to be's there sooner than them. That is playing out across the country. I think some of the other parts of this question relating to CapEx spend in the future related to AI and data centers and then just political es around it. I would say, we haven't really seen any slowdown despite whatever the headlines are on CNBC. Certainly, a lot of continued chase and investment, especially when you're getting into the quantum of power we're talking about here. That said, at lower stages, maybe it's a different market, just not as in tune with it. And then from a political headwind perspective, I think you're going to have that with various new things that are occurring. I don't really see a whole lot of challenge with that with respect to this site. Frankly, one of the primary activist groups in the area that have been critical of data center expansion, have even made public commentary about if you're going to do it, this is the type of site that you do it with where it's off the highway, up a hill set apart from residential and not very disruptive. So hopefully, I covered everything. I'm not quite sure, but I think I covered most of what you're looking for.

The next question comes from Michael Goldsmith with UBS.

First question, you invested $750 million in 2025. You're guiding to $500 million to $625 million. I think you talked a little bit about maybe the outlook for '26 being a little bit conservative or doesn't require that much incremental investment. So just trying to reconcile those 2 facts and just trying to understand, assume why point to -- you sell an investment at this point in the year, just kind of given some of your -- also your earlier comments on just the opportunities that you're seeing out there.

I think you sort of touched on it in your question there. We usually start the year a little conservative. Our guide for investment activity. to start 2026 is consistent roughly with what our guide was last year for 2025. And then we revised and updated over the course of the year as we saw more opportunities. With our focus being on this rolling $350 million to $500 million build-to-suit pipeline, we know going into a year that we've already got the majority of our investment activity taken care of. . We're always going to leave a little bit of room there for opportunistic regular way deals, sale leasebacks and lease assumptions as partners come and approach us for direct deals. And so right now, that's what we've built into this is that we're going to execute on the plan that we already have. We're going to be sticking to the script and moving forward with what we have told you that we were going to do and execute on that. But we are very open to the idea of opportunistically increasing that if we see the right opportunities with the right people, the right economics over the course of the year, and we've got the capital to do it. So we'll start conservative and we'll build over time. So if that should hopefully help reconcile the way you're thinking about year-end activity for '25 and sort of how we started '26.

Exciting. And then just as a follow-up, you amended some of the term loan agreements. How much of a benefit do you expect to see -- how should that translate to 2026? How much savings do you anticipate from that?

Yes. I mean the $1 billion of term loans that are impacted by the 10 basis points and then $300 million by the 25 basis points. So you got about $2 million. .

The next question comes from John Kim with BMO Capital Markets.

John, you mentioned raising equity in significant scale is not really what you're interested in at this time. That's consistent with what you said at your Investor Day in December. But since then, your stock price has improved, your multiple has gone up about a turn. Can you just remind us what levels you feel comfortable raising equity? And how do you view the potential for multiple expansion if your balance sheet improves back to -- towards the 5x leverage that you've historically operated at.

Yes. So I think it is fairly consistent with what I've been saying. I am thrilled with the improvement that we've seen. Trading where we are getting a full multiple turn above is good. We're still below average. So as I said in my remarks, I'm still pleased and very proud of the total return that we've delivered to shareholders over the last 3 years and in 2025, in particular, and the resulting increase in our equity multiple. But sitting where we are, the relative valuation still frustrates me, not even being at the average level is something that -- we'll continue to frustrate me until we get there. And when we do, you're talking even at an average equity multiple, you're talking about a stock price that's in that like $21 to $22 range. The word constructive is probably overused in our space on these calls, but I'll use it here. The setup is certainly more constructive today than it was even 6 months ago. And my hope and belief is that with the execution that we delivered in '25 and the execution that I know we're going to deliver in 2026. It will be even more constructive hopefully towards the end of the year or into 2017, where we can more consistently raise equity at a place that's going to be attractive and getting us into that virtuous cycle. Until we get there, we'll continue to control our own destiny. Kevin has been dabbling, as he said, on the ATM with the $43 million that we've got on a forward basis through the end of the year with an effective price in the mid- to high 18s, which feels good. relative to the opportunities that we have in front of us with 8.6% straight-line yield on these build-to-suits, the acquisitions that we're seeing, as you heard us talk about earlier. So the place where we're investing the capital relative to what we've been raising makes these dollars work even though it's not sort of the dollars that make my heart go pitter patter. So we will continue to evaluate. And I think the efforts that we've had should justify pushing this multiple up, even though I know that, that takes time and consistent execution, but that's what I know we're going to deliver, and I think we'll be having a different conversation about this towards the end of the year and into '27.

I appreciate that. But just to clarify, is this a relative multiple that you're looking at relative to your peers, which could be kind of moving around or a total WAC concept? I know you gave the '21 to '22 as a guidepost, but what metric is more important to you?

Both. I mean the answer is both, right? I mean the absolute value is on the second part of John's comments is all measured against what the opportunity set is. And so the answer is both. I think I would apply the concept of sale to the former, meaning relative valuation and levels that are a bit further from the absolute number that works maybe in a different set of circumstances. . So I'm not trying to give you a not to answer. It's just -- to your point, it is a moving target, and our posture remains opportunistic.

The next question comes from CAitlin Burrows with Goldman Sachs.

I had a quick follow-up question on American Signature, sorry to bring it up again. But just to clarify, I figured all together. You mentioned that they filed in November, and I think the new tenant is paying the unchanged rent as of February 6. So I was just wondering if you could clarify what went on between November filing and February 6?

It was a fairly small assumption. So we had 6 leases that were part of the bankruptcy process. I think we probably have this conversation with folks. There was a handful of them that were identified for rejection as a part of bankruptcy process, but Gartner White was very interested in our sites. . They have been looking to expand in the last 2 years and this was a great opportunity for them to do it. So as it stands today, they have simply stepped into our 6 leases. And then the conversation that I alluded to earlier is that we're looking to leverage that into a new master lease as well as some additional minor changes in the lease structure itself. But in terms of the lease dynamics, we didn't lose any -- there was no bad debt associated with American Signature because we were able to collect off of our letters of credit for the [ misrent ] in November. We collected debt -- excuse me, we collected our rent on an administrative basis in the bankruptcy proceeding. And then Gartner White has picked up the tab going forward. So we're in a great spot on that and just want to sort of make some incremental improvements.

Got it. Okay. And then changing topics. You mentioned a few times about seeing what comes across your desk and that kind of inbound type of activity. which is great when it happens. I guess as you think about your investment targets build-to-suit or acquisitions, how active is Broadstone today on that outbound effort either on the build-to-suit of the acquisitions? And how has that changed over time?

Extremely. I would say that a lot of it -- all of it is outbound. I think what John was referring to is they also call us. So a lot of this is direct sourced its relationship that we're talking to multiple times a week. So whether the call is coming in or call is going out, I'd say that it's sort of a 2-way street and it's constant communication. In terms of new relationships that we're mining, I'd say the majority of those new relationships are on an outbound basis versus an inbound. .

Thank you. We have no further questions. And I'll hand the call back to the management team for any closing comments.

Thanks, everybody, for joining us today, and we're getting into the conference season. So we're looking forward to seeing many of you in person in the coming months. Enjoy the rest of your day. Thanks all. .