Broadstone Net Lease, Inc.BNL
Broadstone Net Lease, Inc. Commitments Disclosure
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 costs 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.
As of December 31, 2025, the Company has commitments to fund 11 build-to-suit transactions with remaining obligations of $192.3 million expected to fund in multiple draws through November 2026, using a combination of available cash on hand and Revolving Credit Facility borrowings. Rent is contractually scheduled to commence when the properties reach substantial completion and are made available for use by the tenant, which is expected to occur at various dates between April 2025 and November 2026.
The Company is a party to two separate tax protection agreements with the contributing members of two distinct UPREIT transactions and a third tax protection agreement entered into in connection with the Company’s 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 tax protection agreement entered into in connection with
the Company’s internalization, 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 are not probable. Therefore, there is no impact to the Consolidated Financial Statements. Based on values as of December 31, 2025, taxable sales of the applicable properties would trigger liability under the agreements of approximately $20.4 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.
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 and Finance Leases
As described in Note 2, the Company is a lessee under non-cancelable operating and finance leases associated with its corporate headquarters and other office spaces as well as ground leases. The Company’s obligations under leases primarily consist of a lease for the Company’s corporate office space, which expires in October 2033 and was determined to be an operating lease. The lease contains two five-year extension options, exercisable at the Company’s discretion, that are not reasonably certain to be exercised, and are therefore excluded from our calculation of the lease liability. The remaining lease obligations primarily consist of ground leases that, in accordance with the terms of our leases, are typically required to be reimbursed by our tenants. The Company remains primarily responsible for ground leases in the event a tenant is unable to pay. The weighted average discount rate on our operating and finance leases is 8.4%. The weighted average years remaining on our operating and finance lease liabilities is 27.2 years.
The following table summarizes the total lease costs associated with operating and finance leases:
| (in thousands) | Financial Statement Presentation | For the Year Ended December 31, | ||||||||||||
| 2025 | 2024 | |||||||||||||
| Operating lease costs: | ||||||||||||||
| Office leases | General and administrative | $ | 1,006 | $ | 1,010 | |||||||||
| Ground leases | Property and operating expense | 154 | 141 | |||||||||||
| Ground leases - development properties | Property under development | 199 | — | |||||||||||
| Variable lease costs - ground leases | Property and operating expense | 54 | 60 | |||||||||||
| Financing lease costs: | ||||||||||||||
| Amortization of right-of-use assets | Depreciation and amortization | 50 | — | |||||||||||
| Interest expense on lease liabilities | Interest expense | 248 | — | |||||||||||
| Total lease cost | $ | 1,711 | $ | 1,211 | ||||||||||
The following table summarizes payments associated with obligations under operating and finance 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) | 2025 | 2024 | |||||||||
| Operating lease payments | $ | 1,376 | $ | 1,025 | |||||||
| Financing lease payments | 200 | — | |||||||||
| Total | $ | 1,576 | $ | 1,025 | |||||||
At December 31, 2025, minimum future rental payments due from the Company for operating and finance leases over the next five years and thereafter are as follows:
| (in thousands) | Operating Leases | Financing Leases | |||||||||
| 2026 | $ | 1,306 | $ | 218 | |||||||
| 2027 | 1,251 | 218 | |||||||||
| 2028 | 1,134 | 218 | |||||||||
| 2029 | 1,174 | 238 | |||||||||
| 2030 | 1,202 | 245 | |||||||||
| Thereafter | 14,632 | 18,061 | |||||||||
| Total undiscounted lease payments | 20,699 | 19,198 | |||||||||
| Present value adjustment for remaining lease payments | (11,119) | (16,468) | |||||||||
| Total lease liability | $ | 9,580 | $ | 2,729 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Mar 14, 2019 | |
| 2017 | Mar 15, 2018 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.