(in thousands, except interest rates)	(in thousands, except interest rates)								Fair Value							(in thousands, except interest rates)								Fair Value
Counterparty		Maturity Date	Fixed Rate			Variable Rate Index	Notional Amount		March 31, 2019			December 31, 2018					Maturity Date	Fixed Rate			Variable Rate Index	Notional Amount		March 31, 2020			December 31, 2019
Bank of America, N.A.		November 2023		2.80	%	one-month LIBOR	$	25,000	$	(699	)	$	(411	)			November 2023		2.80	%	one-month LIBOR	$	25,000	$	(2,178	)	$	(1,136	)
Bank of Montreal		July 2024		1.16	%	one-month LIBOR		40,000		2,048			2,702				July 2024		1.16	%	one-month LIBOR		40,000		(1,324	)		740
Bank of Montreal		January 2025		1.91	%	one-month LIBOR		25,000		361			769				January 2025		1.91	%	one-month LIBOR		25,000		(1,806	)		(402	)
Bank of Montreal		July 2025		2.32	%	one-month LIBOR		25,000		(207	)		222				July 2025		2.32	%	one-month LIBOR		25,000		(2,500	)		(970	)
Bank of Montreal		January 2026		1.92	%	one-month LIBOR		25,000		433			915				January 2026		1.92	%	one-month LIBOR		25,000		(2,118	)		(448	)
Bank of Montreal		January 2026		2.05	%	one-month LIBOR		40,000		366			1,130				January 2026		2.05	%	one-month LIBOR		40,000		(3,685	)		(1,014	)
Bank of Montreal		December 2026		2.33	%	one-month LIBOR		10,000		(83	)		132				December 2026		2.33	%	one-month LIBOR		10,000		(1,231	)		(460	)
Bank of Montreal		December 2027		2.37	%	one-month LIBOR		25,000		(247	)		355				December 2026		1.99	%	one-month LIBOR		25,000		(2,500	)		(577	)
Capital One, N.A.		December 2021		1.05	%	one-month LIBOR		15,000		455			605
Capital One, N.A.		December 2024		1.58	%	one-month LIBOR		15,000		472			727
Capital One, N.A.		January 2026		2.08	%	one-month LIBOR		35,000		243			930
Capital One, N.A.		July 2026		1.32	%	one-month LIBOR		35,000		2,099			2,877
Capital One, N.A.		December 2027		2.37	%	one-month LIBOR		25,000		(265	)		345
Capital One, N.A.		April 2026		2.68	%	one-month LIBOR		15,000		(481	)		(189	)
Bank of Montreal																	December 2027		2.37	%	one-month LIBOR		25,000		(3,497	)		(1,306	)
Bank of Montreal																	May 2029		2.09	%	one-month LIBOR		25,000		(3,342	)		(799	)
Capital One, National Association																	December 2021		1.05	%	one-month LIBOR		15,000		(213	)		143
Capital One, National Association																	December 2024		1.58	%	one-month LIBOR		15,000		(836	)		10
Capital One, National Association																	January 2026		2.08	%	one-month LIBOR		35,000		(3,291	)		(911	)
Capital One, National Association																	April 2026		2.68	%	one-month LIBOR		15,000		(2,007	)		(944	)
Capital One, National Association																	July 2026		1.32	%	one-month LIBOR		35,000		(1,844	)		720
Capital One, National Association																	December 2027		2.37	%	one-month LIBOR		25,000		(3,533	)		(1,278	)
M&T Bank		August 2021		1.02	%	one-month LIBOR		5,016		134			177		^{(a), (b)}		August 2021		1.02	%	one-month LIBOR		4,877		(45	)		41		^{(a), (b)}
M&T Bank		September 2022		2.83	%	one-month LIBOR		25,000		(564	)		(362	)			September 2022		2.83	%	one-month LIBOR		25,000		(1,553	)		(862	)
M&T Bank		November 2023		2.65	%	one-month LIBOR		25,000		(551	)		(254	)			November 2023		2.65	%	one-month LIBOR		25,000		(2,097	)		(1,038	)
Regions Bank		May 2020		2.12	%	one-month LIBOR		50,000		137			271				May 2020		2.12	%	one-month LIBOR		50,000		(92	)		(104	)
Regions Bank		December 2023		1.18	%	one-month LIBOR		25,000		1,108			1,484				December 2023		1.18	%	one-month LIBOR		25,000		(793	)		376
SunTrust Bank		April 2024		1.99	%	one-month LIBOR		25,000		192			554
SunTrust Bank		April 2025		2.20	%	one-month LIBOR		25,000		(44	)		382
SunTrust Bank		July 2025		1.99	%	one-month LIBOR		25,000		276			728
SunTrust Bank		December 2025		2.30	%	one-month LIBOR		25,000		(176	)		299
SunTrust Bank		January 2026		1.93	%	one-month LIBOR		25,000		413			903
Regions Bank																	May 2029		2.11	%	one-month LIBOR		25,000		(3,438	)		(827	)
Regions Bank																	June 2029		2.03	%	one-month LIBOR		25,000		(3,260	)		(651	)
Truist Financial Corporation																	April 2024		1.99	%	one-month LIBOR		25,000		(1,655	)		(451	)
Truist Financial Corporation																	April 2025		2.20	%	one-month LIBOR		25,000		(2,260	)		(781	)
Truist Financial Corporation																	July 2025		1.99	%	one-month LIBOR		25,000		(2,075	)		(524	)
Truist Financial Corporation																	December 2025		2.30	%	one-month LIBOR		25,000		(2,676	)		(993	)
Truist Financial Corporation																	January 2026		1.93	%	one-month LIBOR		25,000		(2,146	)		(458	)
U.S. Bank National Association																	June 2029		2.03	%	one-month LIBOR		25,000		(3,263	)		(681	)
U.S. Bank National Association																	August 2029		1.35	%	one-month LIBOR		25,000		(1,699	)		881
Wells Fargo Bank, N.A.		February 2021		2.39	%	one-month LIBOR		35,000		(85	)		59				February 2021		2.39	%	one-month LIBOR		35,000		(599	)		(302	)
Wells Fargo Bank, N.A.		October 2024		2.72	%	one-month LIBOR		15,000		(436	)		(222	)			October 2024		2.72	%	one-month LIBOR		15,000		(1,591	)		(795	)
Wells Fargo Bank, N.A.		January 2028		2.37	%	one-month LIBOR		75,000		(777	)		1,067				April 2027		2.72	%	one-month LIBOR		25,000		(3,878	)		(1,845	)
Wells Fargo Bank, N.A.		April 2027		2.72	%	one-month LIBOR		25,000		(934	)		(382	)			January 2028		2.37	%	one-month LIBOR		75,000		(10,597	)		(3,914	)
									$	3,188		$	15,813											$	(79,622	)	$	(21,560	)

The increase in depreciation and amortization expense for the three months ended March 31, 2020, is primarily due to the growth in our real estate portfolio.

Prior to the Internalization on February 7, 2020, we paid our third-party manager a quarterly fee equal to 0.25% of the aggregate value of our equity on a fully diluted basis, based on the determined share value established by our board of directors (“Determined Share Value”). Additionally, we paid our third-party manager a monthly fee equal to 3% of gross rentals collected from our real estate portfolio as compensation for its property management services. Upon completion of the Internalization, the agreements with the third-party manager were terminated, resulting in a decrease in these expenses as compared to the prior year period. Our management fees were replaced by compensation and related costs associated with an internalized management structure, and corresponding general and administrative expenses.

The increase in general and administrative expenses mainly reflects the impact of the Internalization, and our employment of approximately 71 employees. At such time, our asset and property management fees were replaced with compensation and related expenses, which totaled $2.8 million during the three months ended March 31, 2020, along with associated general and administrative expenses. During the three months ended March 31, 2020, we also incurred $0.9 million in incremental legal fees associated with general corporate matters that were not incurred in the comparable prior period.

During the three months ended March 31, 2020, we recognized $2.1 million of impairment on our investments in rental properties. We review 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 asset or asset group exceeds the sum of the undiscounted cash flows expected to result from the use of the asset or asset group and its eventual disposition. The timing and amount of impairment fluctuates from period to period depending on the specific facts and circumstances.

The increased interest ~~rate risk, we have strategically added unsecured, fixed-rate, interest-only senior promissory notes (“Senior Notes”)~~expense during the three months ended March 31, 2020, resulted primarily from an increase in average outstanding borrowings as compared to ~~our capital structure. At~~the three months ended March 31, 2019, due mainly to the incurrence of indebtedness associated with a significant acquisition in the third quarter of 2019, and ~~December~~incremental borrowings associated with the Internalization, partially offset by a 61 basis point decrease in our weighted average cost of debt, inclusive of our interest rate swaps. We were able to take advantage of the decreasing interest rates since March 31, ~~2018,~~2019, as our percentage of floating-rate debt increased concurrently with our funding of the aforementioned acquisition. We also amended our 2024 Unsecured Term Loan in July 2019 to reduce the applicable margin from 1.90% to 1.25%.

Our recognition of a gain or loss on the sale of real estate varies from transaction to transaction based on fluctuations in asset prices and demand in the real estate market. During the three months ended March 31, 2020, we ~~had $475.0~~recognized gains of $7.6 million on the sale of 10 properties, compared to gains of $1.4 million on the sale of four properties during the three months ended March 31, 2019.

During the three months ended March 31, 2020, we incurred $1.2 million of ~~Senior Notes outstanding. The Senior Notes were issued~~third-party fees and consulting expenses associated with the Internalization that closed on February 7, 2020. We expect incremental internalization expenses in ~~three series (Series A, B,~~the future to be limited to third party legal and ~~C) as described below.~~accounting fees related to residual work in connection with the transaction.

On April 18, 2017, we issued $150.0 million of Senior Notes (the “Series A Notes”). The Series A Notes are payable interest only during their term, bear interest at a fixed rate of 4.84% per annum, and mature on April 18, 2027.

On July 2, 2018, we issued $325.0 million of Senior Notes in two series: (i) $225.0 million of 10-year Senior Notes (“Series B Notes”) maturing on July 2, 2028, and (ii) $100.0 million of 12-year Senior Notes (“Series C Notes”) maturing on July 2, 2030. The Series B and Series C Notes are payable interest only during their term, and bear interest at a fixed rate of 5.09% per annum and 5.19% per annum, respectively.

~~In addition to funding acquisitions, a portion~~As part of the ~~net proceeds from~~Internalization we may be required to pay additional earnout consideration if certain milestones are achieved during the ~~Series B Notes~~Earnout Periods. We record the fair value of this contingent consideration as an Earnout liability in the Condensed Consolidated Balance Sheets, and ~~Series C Notes was used to repay outstanding borrowings under~~update the ~~Revolver as well as $25.0 million~~fair value at the end of each reporting period. We estimate the fair value of the ~~outstanding principal balance~~earnout liability by considering weighted-average probabilities of likely outcomes, and using a Monte Carlo simulation and discounted cash flow analysis to estimate fair value. These estimates require the Company to make various assumptions about future share prices, timing of an IPO, and other items that are unobservable and are considered Level 3 inputs in the fair value hierarchy.

Upon closing of the Internalization, we recorded an earnout liability of $40.1 million through our ~~2015 Unsecured Term Loan.~~

~~We are subject~~preliminary purchase price allocation, which increased to various covenants and financial reporting requirements pursuant to the loan agreements we have entered into. The table below summarizes the applicable financial covenants, which are substantially the same across each of our loan agreements. As$44.3 million as of March 31, ~~2019, we were~~2020. The increase in ~~compliance~~fair value between February 7, 2020 and March 31, 2020 is primarily a result of an increase in the peer stock price volatility assumption used, as detailed in Note 2 to the Condensed Consolidated Financial Statements above, a direct result of changes in economic circumstances impacting global equity markets.

Our reported results and net earnings per diluted share are presented in accordance with all of our covenants. In the event of default, either through default on payments or breach of covenants, we may be restricted from paying dividends to our stockholders above the annual 90% REIT taxable income distribution requirement. ForGAAP. We also disclose FFO and AFFO, each of which are non-GAAP measures. We believe the ~~previous three years, we paid dividends out~~presentation of ~~our~~FFO and AFFO are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and AFFO should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure, and should be considered in ~~excess~~addition to, and not in lieu of, GAAP financial measures.

We compute FFO in accordance with the standards established by the Board of Governors of Nareit, the worldwide representative voice for REITs and publicly traded real estate companies with an interest in the U.S. real estate and capital markets. Nareit defines FFO as GAAP net income or loss adjusted to exclude net gains (losses) from sales of certain depreciated real estate assets, depreciation and amortization expense from real estate assets, gains and losses from change in control, and impairment charges related to certain previously depreciated real estate assets. To derive AFFO, we modify the Nareit computation of FFO to include other adjustments to GAAP net income related to certain non-cash and non-recurring revenues and expenses, including straight-line rents, cost of debt extinguishments, amortization of lease intangibles, amortization of debt issuance costs, amortization of net mortgage premiums, (gain) loss on interest rate swaps and other non-cash interest expense, realized gains or losses on foreign currency transactions, internalization expenses, extraordinary items, and other specified non-cash items. We believe that such items are not a result of normal operations and thus we believe excluding such items assists management and investors in distinguishing whether changes in our operations are due to growth or decline of operations at our properties or from other factors.

Our leases include cash rents that increase over the term of the ~~required distribution amounts.~~lease to compensate us for anticipated increases in market rentals over time. Our leases do not include significant front-loading or back-loading of payments, or significant rent-free periods. Therefore, we find it useful to evaluate rent on a contractual basis as it allows for comparison of existing rental rates to market rental rates. We further exclude costs or gains recorded on the extinguishment of debt, non-cash interest expense and gains, the amortization of debt issuance costs, net mortgage premiums, and lease intangibles, realized gains and losses on foreign currency transactions, and internalization expenses, as these items are not indicative of ongoing operational results. We use AFFO as a measure of our performance when we formulate corporate goals.

FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers, primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is a useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by non-cash revenues or expenses. FFO and AFFO may not be comparable to similarly titled measures employed by other REITs, and comparisons of our FFO and AFFO with the same or similar measures disclosed by other REITs may not be meaningful.

Neither the SEC nor any other regulatory body has passed judgment on the acceptability of the adjustments to FFO that we use to calculate AFFO. In the future, the SEC, Nareit or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and in response to such standardization we may have to adjust our calculation and characterization of AFFO accordingly.

The following table presents our net income and our non-GAAP FFO and AFFO. Our measures of FFO and AFFO are computed on the basis of amounts attributable to both us and non-controlling interests. As the non-controlling interests share in our net income on a one-for-one basis, the basic and diluted per share amounts are the same.

~~We believe our leverage policy and capital structure provide us with several advantages, including the ability to:~~

We intend to exercise the extension provisions of our debt instruments, refinance, or replace the existing borrowings as they become due, including through additional private debt placements, all with the goal of limiting future debt service to interest payments only. As a result, we do not intend to make principal payments on these debt obligations in the foreseeable future. Additionally, we may be required to increase our borrowing capacity to partially fund future acquisitions. We assess market conditions and the availability and pricing of debt on an ongoing basis, which are critical inputs in our strategic planning and decision-making process. While we believe the current market conditions provide our stockholders with an advantageous capitalization structure and risk-adjusted return, we believe our conservative capital structure is appropriate to absorb temporary market fluctuations. Significant adverse market conditions could impact the availability of debt to fund future acquisitions, our ability to recognize growth in earnings and return on investment for stockholders, and our ability to recast the debt facilities at cost-advantageous pricing points. In the event of such conditions, we would plan to revise our capitalization structure and strategic initiatives to maximize return on investment for our investors. To the extent that we are unable to recast our debt facilities, our cash flows from operations will not be adequate to pay the principal amount of debt, and we may be forced to liquidate properties to satisfy our obligations.

We believe that the cash generated by our operations and our ongoing private offering, our cash and cash equivalents at March 31, 2019, our current borrowing capacity under our unsecured credit facility, and our access to long-term debt capital, including through the debt private placement market, will be sufficient to fund our operations for the foreseeable future and allow us to acquire the real estate to meet our strategic objectives.

Our leases with tenants of our properties are long-term in nature, with a current weighted average remaining lease term of 12.0 years as of March 31, 2019. To mitigate the impact of inflation on our fixed revenue streams, we have implemented limited escalation clauses in our leases. As of March 31, 2019, substantially all of our leases had contractual lease escalations, with an annual weighted average of 2.0%. A majority of our leases have fixed annual rent increases or periodic escalations over the term of the lease (~~e.g.~~, a 10% increase every five years), and the remaining portion has annual lease escalations based on increases in the CPI. These lease escalations mitigate the risk of fixed revenue streams in the case of an inflationary economic environment, and provide increased return in otherwise stable market conditions. As a majority of our portfolio has fixed lease escalations, there is a risk that inflation could be greater than the contractual rent increases.

Our focus on single-tenant, net leases also shelters us from fluctuations in the cost of services and maintenance as a result of inflation. For a portion of our portfolio, we have leases that are not fully triple-net, and, therefore, we bear certain responsibilities for the maintenance and structural component replacements (~~e.g.,~~ ~~roof, structure, or parking lot) that may be required in the future, although the tenants are still required to pay all operating expenses associated with the property (e.g.~~, real estate taxes, insurance, and maintenance). Inflation and increased costs may have an adverse impact to our tenants and their creditworthiness if the increase in costs are greater than their increase in revenue. Where we cannot implement a triple-net lease, we attempt to limit our exposure to inflation through the use of warranties and other remedies that reduce the likelihood of a significant capital outlay.

~~We had no off-balance sheet arrangements as of March 31, 2019, or December 31, 2018.~~

~~The following table provides information with respect to our contractual commitments and obligations as of March 31, 2019 (in thousands).~~

~~At March 31, 2019, investment in rental property of $127.9 million is pledged as collateral against our mortgages and notes payable.~~

Additionally, as of March 31, 2019, we are a party to three separate Tax Protection Agreements (the “Agreements”) with the contributing members (the “Protected Members”) of three distinct UPREIT transactions. The Agreements require us to pay monetary damages in the event of a sale, exchange, transfer, or other disposal of the contributed property in a taxable transaction that would cause a Protected Member to recognize a Protected Gain, as defined in the Agreements, subject to certain exceptions. As of March 31, 2019, the maximum aggregate amount we may be liable for under the Agreements is approximately $12.3 million. Based on information available, we do not believe that the events resulting in damages as detailed above have occurred or are likely to occur in the foreseeable future. Accordingly, we have excluded these commitments from the contractual commitments table above. See a more detailed discussion of the Tax Protection Agreements in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations”, in our Form 10-K.

As of March 31, 2019, our real estate investment portfolio had grown to a net book value of $2,725.0 million, consisting of investments in 644 properties with locations in 42 states and leased to tenants in various industries. All of our real estate investment portfolio represents commercial real estate properties, all but three of our properties (that were previously leased to a single tenant) were subject to a lease as of March 31, 2019, and substantially all of our leasing activity related to our real estate acquisitions.Net income

For the three months ended March 31, 2020, compared to the three months ended March 31, 2019, net income decreased primarily due to a $6.9 million increase in depreciation and ~~2018~~amortization expense associated with a larger real estate portfolio, a $5.2 million increase in interest expense associated with incremental borrowings used to partially fund our real estate acquisitions and the Internalization, a $4.2 million increase in the fair value of our earnout liability, $1.2 million in internalization expenses incurred in 2020, and a $1.1 million increase in provisions for impairment. These factors were partially offset by revenue growth of $9.8 million, combined with a $6.2 million increase in gains on sale of real estate.

~~Total lease revenues~~GAAP net income includes items such as gain or loss on sale of real estate and provisions for impairment, among others, which can vary from quarter to quarter and impact period-over-period comparisons. These fluctuations, combined with increased general and administrative expenses and the increase in our weighted average shares outstanding, contributed to ~~$68.4 million~~the $0.21 decrease in net earnings per diluted share for the three months ended March 31, ~~2019, compared to $55.6 million for~~2020.

The increase in AFFO during the three months ended March 31, ~~2018. The increase in revenue period-over-period is primarily attributable~~2020, as compared to the three months ended March 31, 2019, was primarily driven by revenue growth, ~~in our real estate portfolio,~~ which ~~was achieved through annual~~resulted from rent escalations associated with our same property portfolio, ~~coupled~~accretive acquisitions and strong portfolio operating performance, as well as a $3.3 million decrease in asset and property management fees as a result of terminating the associated agreements in connection with ~~rental~~the Internalization. These factors were partially offset by a $4.7 million increase in general and administrative expense related to incremental compensation and related costs associated with an internalized management structure, and a $5.2 million increase in interest expense associated with incremental borrowings.

The $0.01 decrease in AFFO per diluted share was primarily due to the short-term dilution caused by the immediate increase in BNL’s weighted average shares outstanding resulting from the consideration paid in conjunction with the Internalization. Upon consummation of the transaction in February, BNL began recognizing cash flow and AFFO benefits due to the immediate cost savings achieved by operating the REIT with an internalized management structure, as compared to the recurring management fees and transaction-based fees incurred under its previous externally-managed structure. Although the full dilutive effect of shares outstanding was recognized at the time of the transaction, we expect the continued cost savings to be substantial and to translate into accretive results on a per share basis over time as the cash flow and AFFO benefits are recognized. Further, we expect this accretion will continue to increase as we grow our portfolio and recognize economies of scale.

The following is a reconciliation of net income to FFO and AFFO, which are non-GAAP financial measures. Also presented are the diluted WASO and per diluted share amounts:

We acquire real estate using a combination of debt and equity capital and with cash from operations that is not otherwise distributed to our stockholders. Our focus is on maximizing the risk-adjusted return to our stockholders through an appropriate balance of debt and equity in our capital structure. We are committed to maintaining an investment grade balance sheet through active management of our leverage profile and overall liquidity position. We believe our leverage model has allowed us to take advantage of the lower cost of debt while simultaneously strengthening our balance sheet, as evidenced by our investment grade credit rating of Baa3 from Moody’s Investors Service (“Moody’s”). As of March 31, 2020, our leverage ratio was 45.7% of the approximate market value of our assets, compared to 45.8% as of December 31, 2019.

Liquidity is a measure of our ability to meet potential cash requirements, including our ongoing commitments to repay debt, fund our operations, acquire properties, make distributions to our stockholders, and other general business needs. As a REIT, we are required to distribute to our stockholders at least 90% of our REIT taxable income determined without regard to the dividends paid deduction and excluding net capital gain, on an annual basis. As a result, it is unlikely that we will be able to retain substantial cash balances to meet our long-term liquidity needs, including repayment of debt and the acquisition of additional properties, from our annual taxable income. Instead, we expect to meet our long-term liquidity needs primarily by relying upon external sources of capital.

Our short-term liquidity requirements consist primarily of funds necessary to pay for our operating expenses, including our general and administrative expenses as well as interest payments on our outstanding debt and to pay distributions. Since our portfolio has a strong occupancy level and substantially all of our leases are net leases, we do not currently anticipate making significant capital expenditures or incurring other significant property costs. We expect to meet our short-term liquidity requirements primarily from cash and cash equivalents balances, net cash provided by operating activities, and borrowing under our Revolving Credit Facility. Additionally, our $240 million 2020 Unsecured Term Loan matures in August 2020, at which time we have the option to extend the loan twice, each for a period of six months, subject to our being in compliance with the debt covenants and customary representations and warranties, and payment of a fee equal to 0.05% of the outstanding principal balance at the time of extension. On May 5, 2020, we gave notice that we were exercising the first six-month option, effective August 2, 2020. Refer to Recent Developments – COVID-19 Pandemic for additional discussion regarding the pandemic’s impact to our liquidity profile.

Our long-term liquidity requirements consist primarily of funds necessary to repay debt and invest in additional revenue ~~generated~~generating properties. Debt capital is provided through unsecured term notes, revolving debt facilities, and senior unsecured notes.

The source and mix of our debt capital in the future will be impacted by market conditions as well as our continued focus on lengthening our debt maturity profile to better align with our portfolio’s lease terms, staggering debt maturities to reduce the risk that a significant amount of debt will mature in any single year in the future, and managing our exposure to interest rate risk.

We expect to meet our long-term liquidity requirements primarily from borrowings under our Revolving Credit Facility, future debt and equity financings, and proceeds from limited sales of our properties. Our ability to access these capital sources may be impacted by unfavorable market conditions, particularly in the debt and equity capital markets, that are outside of our control. In addition, our success will depend on our operating performance, our borrowing restrictions, our degree of leverage, and other factors. Our acquisition growth strategy significantly depends on our ability to obtain acquisition financing on favorable terms. We seek to reduce the risk that long-term debt capital may be unavailable to us by strengthening our balance sheet by investing in real estate with creditworthy tenants and lease guarantors, and by maintaining an appropriate mix of debt and equity capitalization. We also, from time to time, obtain or assume non-recourse mortgage financing from banks and insurance companies secured by mortgages on the corresponding specific property. Mortgages, however, are not currently a strategic focus of the active management of our leverage profile. Rather, we enter into mortgages and notes payable as ancillary business transactions on an as-needed basis, most often as the result of lease assumption transactions. Our fiscal strength has enabled us to build a portfolio that is approximately 95% unencumbered on a gross assets basis, with 629 unencumbered properties and approximately $110.8 million of mortgage debt on the remaining properties. Refer to Recent Developments – COVID-19 Pandemic for additional discussion regarding the pandemic’s impact to our liquidity profile.

Equity capital for our real estate acquisition activity has historically been provided from the proceeds of our private offering, including distributions reinvested through our DRIP. We suspended our private offering on January 10, 2020, in connection with our confidential submission of a draft registration statement on Form S-11 with the SEC relating to a proposed IPO. Accordingly, we did not raise any equity through our private offering during the first ~~quarter of 2019 from a~~ccretive property acquisitions completed since the first quarter of 2018, and continued strong portfolio operating performance. We acquired $606.8 million in real estate throughout 2018, excluding capitalized acquisition expenses. These properties provide annual straight-line rental revenue of $47.4 million, or $11.8 million per quarter. ~~The acquisitions closed during~~During the three months ended March 31, ~~2019 did not materially impact reported rental income, due to their timing. The rental rates~~2020, we ~~receive~~raised approximately $5.9 million in equity capital through our DRIP. See Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds” of this Form 10-Q for further information. We announced on ~~the various types~~January 10, 2020 that we were terminating DRIP, effective February 10, 2020.

We achieved our current investment grade credit rating of ~~properties we target across the United States vary from transaction to transaction~~Baa3 based on ~~many factors, such as the terms of the lease, each property’s~~our conservative leverage profile, diversified real estate ~~fundamentals,~~investment portfolio, access to capital, and earnings stability provided by the ~~market rents~~creditworthiness of our tenants. Factors that could negatively impact our credit rating include, but are not limited to: a significant increase in our leverage on a sustained basis, a significant increase in the ~~area.~~ proportion of secured debt levels, a significant decline in our unencumbered asset base, weakening of our corporate governance structure, and a significant decline in our real estate portfolio diversification or the creditworthiness of our tenants. Factors that could positively impact our credit rating include, but are not limited to, continued growth in the portfolio, improvement in our leverage profile, lengthening of our debt maturity profile, and our Internalization. We have aligned our strategic growth priorities with these factors, as we believe the favorable debt pricing and access to multiple sources of debt capital resulting from our investment grade credit rating, provides us with an advantageous cost of capital and risk-adjusted return on investment for our stockholders.

The ~~initial cash capitalization rate on acquisitions closed during the three months ended~~following table sets forth our outstanding Revolving Credit Facility, unsecured term loans and Senior Notes as of March 31, ~~2019, was 7.4%.~~2020.

(in thousands, except interest rates)

Outstanding

Balance

Interest

Rate

Maturity

Date

2020 Unsecured Term Loan

240,000

one-month LIBOR + 1.25%

Aug. 2020

Unsecured Revolving Credit and Term

Loan Agreement

Revolving Credit Facility

353,300

one-month LIBOR + 1.20%

Jan. 2022

2023 Unsecured Term Loan

265,000

one-month LIBOR + 1.35%

Jan. 2023

2024 Unsecured Term Loan

190,000

one-month LIBOR + 1.25%

Jun. 2024

808,300

2022 Unsecured Term Loan

60,000

one-month LIBOR + 1.25%

Feb. 2022

2026 Unsecured Term Loan

450,000

one-month LIBOR + 1.85%

Feb. 2026

Operating Expenses

	For the three months ended										For the three months ended
	March 31,				Increase/(Decrease)						March 31,				Increase/(Decrease)
(in thousands)	2019		2018		$			%			2020		2019		$			%
Operating expenses
Depreciation and amortization	$	24,310	$	19,202	$	5,108			26.6	%	$	31,219	$	24,310	$	6,909			28.4	%
Asset management fees		5,120		4,143		977			23.6	%		2,461		5,120		(2,659	)		(51.9	)%
Property management fees		1,885		1,517		368			24.3	%		1,275		1,885		(610	)		(32.4	)%
Property and operating expense		4,390		2,619		1,771			67.6	%		4,115		4,390		(275	)		(6.3	)%
General and administrative		1,103		1,330		(227	)		(17.1	)%		5,842		1,103		4,739		>100		%
State and franchise tax		443		243		200			82.3	%
Provision for impairment of investment in rental properties		1,017		—		1,017			>100.0	%		2,133		1,017		1,116		>100		%
Total operating expenses	$	38,268	$	29,054	$	9,214			31.7	%	$	47,045	$	37,825	$	9,220			24.4	%

Depreciation and amortization

~~Depreciation~~The increase in depreciation and amortization ~~increased to $24.3 million~~expense for the three months ended March 31, ~~2019, compared to $19.2 million for the three months ended March 31, 2018. The increase~~2020, is primarily due to the growth in our real estate ~~portfolio, as discussed above.~~

~~Asset management fees~~portfolio.

Asset management fees ~~increased~~and Property management fees

Prior to ~~$5.1 million for~~ the ~~three months ended March 31, 2019, compared to $4.1 million for the three months ended March 31, 2018. We pay the Asset Manager~~Internalization on February 7, 2020, we paid our third-party manager a quarterly fee equal to 0.25% of the aggregate value of our equity on a fully diluted basis, based on the determined share value established by our board of directors (“Determined Share ~~Value.~~ Value”). Additionally, we paid our third-party manager a monthly fee equal to 3% of gross rentals collected from our real estate portfolio as compensation for its property management services. Upon completion of the Internalization, the agreements with the third-party manager were terminated, resulting in a decrease in these expenses as compared to the prior year period. Our management fees were replaced by compensation and related costs associated with an internalized management structure, and corresponding general and administrative expenses.

General and administrative

The increase in general and administrative expenses mainly reflects the impact of the Internalization, and our employment of approximately 71 employees. At such time, our asset and property management fees were replaced with compensation and related expenses, which totaled $2.8 million during the three months ended March 31, ~~2019, compared to the comparable period in 2018, is the result of an increase in our total outstanding equity on a fully diluted basis, combined~~2020, along with ~~an increase in the Determined Share Value.~~

~~The $85.00 Determined Share Value in effect as of March 31, 2019, reflected an increase of 4.9% from the $81.00 Determined Share Value in effect as ofMarch 31, 2018. Additionally, the number of shares of our common stock~~associated general and non-controlling membership units outstanding increased as the result of continued equity capital investments. As of March 31, 2019, there were 24.6 million shares of our common stock and non-controlling membership units outstanding, compared to 21.1 million as of March 31, 2018. The increase in equity capital was used to partially fund the continued growth in our real estate portfolio.

~~Property and operating expense~~

~~Property and operating expense increased to $4.4 million for~~administrative expenses. During the three months ended March 31, ~~2019, compared to $2.6~~2020, we also incurred $0.9 million for the three months ended March 31, 2018. The increase is mainly attributable to the number of properties we own for which we are responsible for engaging a third-party property manager to manage ongoing property maintenance, along with insurance and real estate taxesin incremental legal fees associated with ~~those properties. A majority of these expenses are paid by us and reimbursed by~~general corporate matters that were not incurred in the ~~tenant under the terms of the respective leases. There was a corresponding increase in operating expenses billed to tenants and included within Lease revenues.~~comparable prior period.

Provision for impairment of investment in rental properties

During the three months ended March 31, ~~2019,~~2020, we recognized ~~$1.0~~$2.1 million of impairment on our investments in rental properties. We review 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 asset or asset group exceeds the sum of the undiscounted cash flows expected to result from the use of the asset or asset group and its eventual disposition. The timing and amount of impairment ~~recognized~~fluctuates from period to period depending on the specific facts and circumstances.

Other income (expenses)

	For the three months ended
	March 31,						Increase/(Decrease)
(in thousands)	2020			2019			$			%
Other income (expenses)
Interest income	$	9		$	1		$	8		>100		%
Interest expense		(20,991	)		(15,828	)		5,163			32.6	%
Cost of debt extinguishment		(22	)		(713	)		(691	)		(96.9	)%
Gain on sale of real estate		7,619			1,400			6,219		>100		%
Income taxes		(549	)		(443	)		106			23.9	%
Internalization expenses		(1,205	)		—			1,205		>100		%
Change in fair value of earnout liability		(4,177	)		—			4,177		>100		%
Other losses		(22	)		—			22		>100		%

Interest expense

The increased interest expense during the three months ended March 31, ~~2019, related~~2020, resulted primarily from an increase in average outstanding borrowings as compared to one property whose carrying amount we determined was not recoverable. In determining the fair value of the assets at the time of measurement, we utilized a capitalization rate of 14.6%, and a weighted average discount rate of 8%. We did not recognize any impairment during the three months ended March 31, 2018.

~~Other income (expenses)~~

For the three months ended

March 31,

Increase/(Decrease)

(in thousands)

2019

2018

$

%

Other income (expenses)

Preferred distribution income

$
—

$
188

$
(188
)

(100.0
)%
Interest income

1

110

(109
)

(99.1
)%
Interest expense

(15,828
)

(11,177
)

4,651

41.6
%
Cost of debt extinguishment

(713
)

—

713

>100.0
%
Gain on sale of real estate

1,400

3,339

(1,939
)

(58.1
)%

~~Interest expense~~

~~Interest expense increased to $15.8 million for~~ the three months ended March 31, 2019, ~~compared~~due mainly to ~~$11.2 million for~~ the ~~three months ended March 31, 2018, due to increases~~incurrence of indebtedness associated with a significant acquisition in both our average outstanding borrowings as well as the weighted average interest rate we pay on those borrowings as compared to a year ago. Both of these factors were mainly the result of our issuing $325 million of Series B and Series C Notes during the third quarter of ~~2018. These~~2019, and incremental borrowings ~~bear~~associated with the Internalization, partially offset by a 61 basis point decrease in our weighted average cost of debt, inclusive of our interest ~~at fixed rates in excess~~rate swaps. We were able to take advantage of the decreasing interest rates ~~paid on~~since March 31, 2019, as our ~~variable-rate debt. In addition,~~percentage of floating-rate debt increased concurrently with our funding of the ~~spread above one-month LIBOR on the 2019~~aforementioned acquisition. We also amended our 2024 Unsecured Term Loan ~~of 1.85%, is greater than~~in July 2019 to reduce the ~~spread of 1.40% paid on the 2015 Unsecured Term Loan that it replaced. At March 31, 2019, the weighted average interest rate on our outstanding borrowings was 4.42%, compared~~applicable margin from 1.90% to ~~3.29% at March 31, 2018.~~1.25%.

~~Cost of debt extinguishment~~

Cost of debt extinguishment was $0.7 million for the three months ended March 31, 2019, and related primarily to the early extinguishment of two mortgages, and the debt refinancing that occurred in the first quarter of 2019. We did not extinguish any debt during the first quarter of 2018. To the extent that the price paid to extinguish the debt is greater than the carrying value of that debt, we recognize a loss (cost) on extinguishment. The loss is increased by the amount of previously capitalized debt acquisition costs that remain unamortized at the time of extinguishment. These amounts fluctuate period-over-period based on the variability in the interest rate environment, changes in financial institutions’ credit standards, and our activity in capital markets to manage our leverage position.

Gain on sale of real estate

During the three months ended March 31, 2019, we recognized gains of $1.4 million on the sale of real estate, compared to gains of $3.3 million during the three months ended March 31, 2018. We sold four properties during the three months ended March 31, 2019, and five properties during the three months ended March 31, 2018. Our recognition of a gain or loss on the sale of real estate varies from transaction to transaction based on fluctuations in asset prices and demand in the real estate market. During the three months ended March 31, 2020, we recognized gains of $7.6 million on the sale of 10 properties, compared to gains of $1.4 million on the sale of four properties during the three months ended March 31, 2019.

Internalization expenses

During the three months ended March 31, 2020, we incurred $1.2 million of third-party fees and consulting expenses associated with the Internalization that closed on February 7, 2020. We expect incremental internalization expenses in the future to be limited to third party legal and accounting fees related to residual work in connection with the transaction.

Change in fair value of earnout liability

As part of the Internalization we may be required to pay additional earnout consideration if certain milestones are achieved during the Earnout Periods. We record the fair value of this contingent consideration as an Earnout liability in the Condensed Consolidated Balance Sheets, and update the fair value at the end of each reporting period. We estimate the fair value of the earnout liability by considering weighted-average probabilities of likely outcomes, and using a Monte Carlo simulation and discounted cash flow analysis to estimate fair value. These estimates require the Company to make various assumptions about future share prices, timing of an IPO, and other items that are unobservable and are considered Level 3 inputs in the fair value hierarchy.

Upon closing of the Internalization, we recorded an earnout liability of $40.1 million through our preliminary purchase price allocation, which increased to $44.3 million as of March 31, 2020. The increase in fair value between February 7, 2020 and March 31, 2020 is primarily a result of an increase in the peer stock price volatility assumption used, as detailed in Note 2 to the Condensed Consolidated Financial Statements above, a direct result of changes in economic circumstances impacting global equity markets.

Net Income and Non-GAAP Measures (FFO and AFFO)

Our reported results and net earnings per diluted share are presented in accordance with GAAP. We also disclose FFO and AFFO, each of which are non-GAAP measures. We believe the presentation of FFO and AFFO are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and AFFO should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure, and should be considered in addition to, and not in lieu of, GAAP financial measures.

Our leases include cash rents that increase over the term of the lease to compensate us for anticipated increases in market rentals over time. Our leases do not include significant front-loading or back-loading of payments, or significant rent-free periods. Therefore, we find it useful to evaluate rent on a contractual basis as it allows for comparison of existing rental rates to market rental rates. We further exclude costs or gains recorded on the extinguishment of debt, non-cash interest expense and gains, the amortization of debt issuance costs, net mortgage premiums, and lease intangibles, realized gains and losses on foreign currency transactions, and internalization expenses, as these items are not indicative of ongoing operational results. We use AFFO as a measure of our performance when we formulate corporate goals.

Neither the SEC nor any other regulatory body has passed judgment on the acceptability of the adjustments to FFO that we use to calculate ~~FFO and~~ AFFO. In the future, the SEC, Nareit or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and in response to such standardization we may have to adjust our calculation and characterization of ~~FFO and~~ AFFO accordingly.

~~Net Income, FFO, and AFFO for the three months ended March 31, 2019 and 2018~~

The following table presents our net income and our non-GAAP FFO and ~~AFFO for the three months ended March 31, 2019 and 2018.~~AFFO. Our measures of FFO and AFFO are computed on the basis of amounts attributable to both us and non-controlling interests. As the non-controlling interests share in our net income on a one-for-one basis, the basic and diluted per share amounts are the same.

	For the three months ended										For the three months ended
	March 31,				Increase/(Decrease)						March 31,				Increase/(Decrease)
(in thousands, except per share data)	2019		2018		$			%			2020		2019		$			%
Net income	$	15,022	$	18,995	$	(3,973	)		(20.9	)%	$	11,848	$	15,022	$	(3,174	)		(21.1	)%
Net earnings per diluted share		0.62		0.92		(0.30	)		(32.6	)%		0.41		0.62		(0.21	)		(33.9	)%
FFO		38,949		34,858		4,091			11.7	%		37,572		38,949		(1,377	)		(3.5	)%
FFO per diluted share		1.62		1.68		(0.06	)		(3.6	)%		1.29		1.62		(0.33	)		(20.4	)%
AFFO		34,169		30,271		3,898			12.9	%		41,068		34,169		6,899			20.2	%
AFFO per diluted share		1.42		1.46		(0.04	)		(2.7	)%		1.41		1.42		(0.01	)		(0.7	)%
Diluted WASO^(a)		24,072		20,719		3,353			16.2	%		29,053		24,072		4,981			20.7	%

^(a)	Weighted average number of shares of our common stock and ~~membership units~~OP Units outstanding (“WASO”), computed in accordance with GAAP.

Net income

~~Net income decreased~~For the three months ended March 31, 2020, compared to ~~$15.0 million for~~ the three months ended March 31, 2019, ~~compared~~net income decreased primarily due to ~~$19.0~~a $6.9 million ~~for the three months ended March 31, 2018. Revenue growth associated with the increase in the number of properties in our portfolio, was more than offset by an associated~~ increase in depreciation and amortization ~~asset management~~expense associated with a larger real estate portfolio, a $5.2 million increase in interest expense associated with incremental borrowings used to partially fund our real estate acquisitions and ~~property management~~the Internalization, a $4.2 million increase in the fair value of our earnout liability, $1.2 million in internalization expenses incurred in 2020, and a $1.1 million increase in provisions for impairment. These factors were partially offset by revenue growth of $9.8 million, combined with ~~increased interest expense and decreased~~a $6.2 million increase in gains on sale of real estate.

GAAP net income includes items such as gain or loss on sale of real estate and provisions for impairment, among others, which can vary from quarter to quarter and impact period-over-period comparisons. These fluctuations, combined with increased general and administrative expenses and the increase in ~~2019, as compared~~our weighted average shares outstanding, contributed to ~~2018.~~

~~During~~ the first quarter of 2019, certain deals, that had been anticipated to close when setting the first quarter’s equity cap, were delayed and are expected to close during the second quarter. This delay resulted in a leverage ratio of 40.8% as of March 31, 2019, compared to 41.7% as of March 31, 2018, and a$0.21 decrease ~~of $0.30~~ in net earnings per diluted share for the three months ended March 31, ~~2019~~2020.

AFFO

The increase in AFFO during the three months ended March 31, 2020, as compared to the three months ended March 31, ~~2018.~~

~~FFO and AFFO~~

~~FFO increased by 11.7% to $38.9 million for the three months ended March 31,~~ 2019, compared to $34.9 million for the three months ended March 31, 2018. AFFO increased by 12.9% to $34.2 million for the three months ended March 31, 2019, compared to $30.3 million for the three months ended March 31, 2018. The increase in both FFO and AFFO was primarily driven by revenue growth, ~~in our real estate investment portfolio. As discussed above, this~~which resulted from rent escalations associated with our same property portfolio, accretive acquisitions ~~made since the first quarter of 2018,~~ and strong portfolio operating ~~performance. During~~performance, as well as a $3.3 million decrease in asset and property management fees as a result of terminating the ~~first quarter of 2019, certain deals, that had been anticipated~~associated agreements in connection with the Internalization. These factors were partially offset by a $4.7 million increase in general and administrative expense related to ~~close when setting the first quarter’s equity cap, were delayed~~incremental compensation and ~~are expected to close during the second quarter. This delay resulted~~related costs associated with an internalized management structure, and a $5.2 million increase in ~~a leverage ratio of 40.8% as of March 31, 2019, compared to 41.7% as of March 31, 2018, and decreases of $0.06 and $0.04~~interest expense associated with incremental borrowings.

The $0.01 decrease in ~~FFO per diluted share and~~ AFFO per diluted share ~~respectively, for~~was primarily due to the ~~three months ended March 31, 2019~~short-term dilution caused by the immediate increase in BNL’s weighted average shares outstanding resulting from the consideration paid in conjunction with the Internalization. Upon consummation of the transaction in February, BNL began recognizing cash flow and AFFO benefits due to the immediate cost savings achieved by operating the REIT with an internalized management structure, as compared to the ~~three months ended March 31, 2018.~~recurring management fees and transaction-based fees incurred under its previous externally-managed structure. Although the full dilutive effect of shares outstanding was recognized at the time of the transaction, we expect the continued cost savings to be substantial and to translate into accretive results on a per share basis over time as the cash flow and AFFO benefits are recognized. Further, we expect this accretion will continue to increase as we grow our portfolio and recognize economies of scale.

Reconciliation of Non-GAAP Measures

The following is a reconciliation of net income to FFO and AFFO, which are non-GAAP financial measures. Also presented ~~is information regarding~~are the diluted WASO and per diluted share amounts:

	For the three months ended
(in thousands, except per share data)	March 31,
	2020			2019
Net income	$	11,848		$	15,022
Real property depreciation and amortization		31,210			24,310
Gain on sale of real estate		(7,619	)		(1,400	)
Provision for impairment on investment in rental properties		2,133			1,017
FFO	$	37,572		$	38,949
Capital improvements / reserves		—			(49	)
Straight-line rent adjustment		(1,612	)		(5,143	)
Adjustment to provision for credit losses		(17	)		—
Cost of debt extinguishment		22			713
Amortization of debt issuance costs		888			553
Amortization of net mortgage premiums		(35	)		(35	)
Gain on interest rate swaps and other non-cash interest expense		(42	)		(81	)
Amortization of lease intangibles		(1,138	)		(738	)
Internalization expenses		1,205			—
Severance		26			—
Change in fair value of earnout liability		4,177			—
Other losses		22			—
AFFO	$	41,068		$	34,169

Diluted WASO		29,053			24,072

Net earnings per share, basic and diluted	$	0.41		$	0.62
FFO per diluted share		1.29			1.62
AFFO per diluted share		1.41			1.42

Liquidity and Capital Resources

General

Liquidity/REIT Requirements

Short-term Liquidity Requirements

Long-term Liquidity Requirements

Our long-term liquidity requirements consist primarily of funds necessary to repay debt and invest in additional revenue generating properties. Debt capital is provided through unsecured term notes, revolving debt facilities, and senior unsecured notes.

Equity Capital Resources

Credit Rating

We achieved our current investment grade credit rating of Baa3 based on our conservative leverage profile, diversified real estate investment portfolio, access to capital, and earnings stability provided by the creditworthiness of our tenants. Factors that could negatively impact our credit rating include, but are not limited to: a significant increase in our leverage on a sustained basis, a significant increase in the proportion of secured debt levels, a significant decline in our unencumbered asset base, weakening of our corporate governance structure, and a significant decline in our real estate portfolio diversification or the creditworthiness of our tenants. Factors that could positively impact our credit rating include, but are not limited to, continued growth in the portfolio, improvement in our leverage profile, lengthening of our debt maturity profile, and our Internalization. We have aligned our strategic growth priorities with these factors, as we believe the favorable debt pricing and access to multiple sources of debt capital resulting from our investment grade credit rating, provides us with an advantageous cost of capital and risk-adjusted return on investment for our stockholders.

Existing Credit Facilities

The following table sets forth our outstanding Revolving Credit Facility, unsecured term loans and Senior Notes as of March 31, 2020.

For the three months ended

(in thousands, except per share data)

March 31,

2019

2018

Net income

$
15,022

$
18,995

Real property depreciation and amortization

24,310

19,202

Gain on sale of real estate

(1,400
)

(3,339
)
Provision for impairment on investment in rental properties

1,017

—

FFO

$
38,949

$
34,858

Capital improvements / reserves

(49
)

(49
)
Straight-line rent adjustment

(5,143
)

(5,141
)
Cost of debt extinguishment

713

—

Amortization of debt issuance costs

553

461

Amortization of net mortgage premiums

(35
)

(36
)
Gain on interest rate swaps and other non-cash interest expense

(81
)

—

Amortization of lease intangibles

(738
)

178

AFFO

$
34,169

$
30,271

Diluted WASO

24,072

20,719

Net earnings per share, basic and diluted

$
0.62

$
0.92

FFO per diluted share

1.62

1.68

AFFO per diluted share

$
1.42

$
1.46

(in thousands, except interest rates)	Outstanding Balance			Interest Rate	Maturity Date
2020 Unsecured Term Loan	$	240,000		one-month LIBOR + 1.25%	Aug. 2020
Unsecured Revolving Credit and Term Loan Agreement
Revolving Credit Facility		353,300		one-month LIBOR + 1.20%	Jan. 2022
2023 Unsecured Term Loan		265,000		one-month LIBOR + 1.35%	Jan. 2023
2024 Unsecured Term Loan		190,000		one-month LIBOR + 1.25%	Jun. 2024
		808,300
2022 Unsecured Term Loan		60,000		one-month LIBOR + 1.25%	Feb. 2022
2026 Unsecured Term Loan		450,000		one-month LIBOR + 1.85%	Feb. 2026
Senior Notes
Series A		150,000		4.84%	Apr. 2027
Series B		225,000		5.09%	Jul. 2028
Series C		100,000		5.19%	Jul. 2030
		475,000
Total		2,033,300
Debt issuance costs, net		(7,413	)
	$	2,025,887

2020 Unsecured Term Loan

The 2020 Unsecured Term loan has an initial maturity date of August 2020. Borrowings under the 2020 Unsecured Term Loan bear interest at variable rates based on LIBOR plus a margin based on our credit rating ranging between 0.85% and 1.65% per annum. Based on our current credit rating, the applicable margin is 1.25% as of March 31, 2020. The 2020 Unsecured Term Loan allows for two six-month extensions, at our option, subject to our being in compliance with the debt covenants and customary representations and warranties, and payment of a fee equal to 0.05% of the outstanding principal balance at the time of extension. On May 5, 2020, we gave notice that we were exercising the first of these options, effective as of August 2, 2020.

Revolving Credit Facility

The Revolving Credit Facility has a maximum availability of $600 million, and includes a $35 million sublimit for swingline loans and $20 million available for issuance of letters of credit. The Revolving Credit Facility has an initial maturity date of January 2022 and provides for one five-month extension, at our election, subject to certain conditions set forth in the agreement and payment of a 0.0625% fee on the revolving commitments. The Revolving Credit Facility contains an applicable facility fee ranging between 0.125% and 0.30% per annum, based on our credit rating. Based on our current credit rating of Baa3, the facility fee is 0.25% per annum as of March 31, 2020.

Borrowings on the Revolving Credit Facility bear interest at variable rates based on LIBOR plus a margin based on our credit rating ranging between 0.825% and 1.55% per annum. Based on our current credit rating, the applicable margin is 1.20% as of March 31, 2020.

2023 Unsecured Term Loan

The 2023 Unsecured Term loan has an initial maturity date of January 2023. Borrowings under the 2023 Unsecured Term Loan bear interest at variable rates based on LIBOR plus a margin based on our credit rating ranging between 0.90% and 1.75% per annum. Based on our current credit rating, the applicable margin is 1.35% as of March 31, 2020.

2024 Unsecured Term Loan

The 2024 Unsecured Term Loan has an initial maturity date of June 2024. Borrowings under the 2024 Unsecured Term Loan are subject to interest at variable rates based on LIBOR plus a margin based on our credit rating ranging between 0.85% and 1.65% per annum. Based on our current credit rating, the applicable margin is 1.25% as of March 31, 2020.

2022 Unsecured Term Loan

On February 7, 2020, we entered into a $60 million term loan agreement maturing in February 2022 with JP Morgan Chase Bank, N.A., as administrative agent. The 2022 Unsecured Term Loan was used to partially repay BRE debt that had been 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 on our credit rating, ranging between 0.85% and 1.65% per annum. Based on our current credit rating, the applicable margin is 1.25% as of March 31, 2020.

2026 Unsecured Term Loan

The 2026 Unsecured Term Loan includes an accordion feature that provides for an increase in the facility size up to a total of $550 million of available capacity. Borrowings under the 2026 Unsecured Term Loan are payable interest only on a monthly basis during the term of the loan, with the principal amount due in February 2026. Borrowings under the 2026 Unsecured Term loan bear interest equal to LIBOR plus a margin based on our credit rating ranging between 1.45% and 2.40% per annum. Based on our current credit rating, the applicable margin is 1.85% as of March 31, 2020.

Senior Notes

To mitigate interest rate risk, we have strategically added unsecured, fixed-rate, interest-only senior promissory notes (“Senior Notes”) to our capital structure. The Senior Notes were issued in three series (Series A, B, and C) as described below.

Series A Notes

The Series A Notes are payable interest only semiannually during their term, bear interest at a fixed rate of 4.84% per annum, and mature on April 18, 2027.

Series B and Series C Notes

The Series B and Series C Notes are payable interest only semiannually during their term, and bear interest at fixed rates of 5.09% per annum and 5.19% per annum, respectively. The Series B Notes mature on July 2, 2028, and the Series C Notes mature on July 2, 2030.

Debt Covenants

We are subject to various covenants and financial reporting requirements pursuant to our debt facilities. The table below summarizes the applicable financial covenants, which are substantially the same across each of our debt facilities. As of March 31, 2020, we believe that we were in compliance with all of our covenants. In the event of default, either through default on payments or breach of covenants, we may be restricted from paying dividends to our stockholders in excess of dividends required to maintain our REIT qualification. For each of the previous three years, we paid dividends out of our cash flows from operations in excess of the distribution amounts required to maintain our REIT qualification. Refer to Recent Developments – COVID-19 Pandemic for additional discussion over the pandemic’s impact on our ability to satisfy our financial covenants.

Covenants	Required	Actual (as of March 31, 2020)
Leverage Ratio^(a)	≤ 0.60 to 1.00		0.54
Secured Indebtedness Ratio^(b)	≤ 0.40 to 1.00		0.03
Unencumbered Coverage Ratio^(c)	≥ 1.75 to 1.00		3.54
Fixed Charge Coverage Ratio^(d)	≥ 1.50 to 1.00		2.81
Total Unsecured Indebtedness to Total Unencumbered Eligible Property Value^(e)	≤ 0.60 to 1.00		0.59
Dividends and Other Restricted Payments	Only applicable in case of default	Not Applicable

^(a)

The leverage ratio is calculated as the ratio of total indebtedness to total market value. For debt covenant purposes, total market value is computed on a consolidated basis as the net operating income for the most recently completed fiscal quarter on properties owned for four consecutive quarters at a capitalization rate of 7.50%, multiplied by four, plus the acquisition price of properties acquired in the last four quarters, and the GAAP book value of mortgages receivable, development property, unimproved real estate, unrestricted cash and cash equivalents, and all other tangible assets (the latter subject to a cap of 5% of total market value). For purposes of determining total market value, net operating income from properties disposed of during the immediately preceding period of four consecutive fiscal quarters are excluded.

^(b)	The secured indebtedness ratio is the ratio of secured indebtedness to total market value. Secured indebtedness represents outstanding mortgage borrowings.

^(c)	The unencumbered coverage ratio is the ratio of net operating income for all eligible properties to unsecured interest expense for the most recent fiscal quarter.

^(d)

The fixed charge coverage ratio is the ratio of adjusted EBITDA to fixed charges for the most recent fiscal quarter. Adjusted EBITDA is computed as net income adjusted for depreciation and amortization, interest expense, income tax expense and franchise tax expense, gains and losses from the sale of properties, equity in net income of unconsolidated subsidiaries, non-cash expenses related to mark to market exposure under derivatives contracts, straight-line rent adjustments, amortization of intangibles, gains and losses on early extinguishment of debt, non-cash severance and restructuring charges, transaction costs expensed, and reserves for replacements with respect to certain properties. Fixed charges are computed as interest expense, plus scheduled principal repayments of debt, excluding balloon payments if applicable, plus preferred dividends paid or accrued, if applicable.

^(e)	The ratio is calculated as the ratio of total unsecured indebtedness to unencumbered property value.

Cash Flows

Cash and cash equivalents and restricted cash totaled $96.7 million and $13.2 million at March 31, 2020 and 2019, respectively. The table below shows information concerning cash flows for the three months ended March 31, 2020 and 2019:

	For the three months ended
	March 31,
(In thousands)	2020		2019
Net cash provided by operating activities	$	40,319	$	31,639
Net cash provided by (used in) investing activities		4,474		(64,637	)
Net cash provided by financing activities		31,608		27,169
Increase (decrease) in cash and cash equivalents and restricted cash	$	76,401	$	(5,829	)

The increase in net cash provided by operating activities during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019, was mainly due to growth in our real estate portfolio.

The change in net cash provided by investing activities during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019, was mainly due to decreased acquisition volume and increased proceeds from the disposal of properties, offset by cash paid in connection with the Internalization.

The increase in net cash provided by financing activities during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019, mainly reflects a net increase in borrowings (as discussed in Liquidity above), partially offset by a decrease in proceeds from the issuance of our common stock and increased distributions resulting from an increase in the number of shares of common stock outstanding.

Impact of Inflation

The leases in our portfolio are long-term in nature, with a current ABR weighted average remaining lease term of 11.3 years as of March 31, 2020. Our rental revenues may be impacted by inflation. Substantially all of our leases have contractual lease escalations, with an ABR weighted average of 2.1% as of March 31, 2020. Many of our leases contain rent escalators that increase rent at a fixed amount and may not be sufficient during periods of high inflation. Leases that contributed approximately 16.0% of our ABR as of March 31, 2020, contained rent escalators based on increases in CPI and the associated increases in rental revenue may be limited during periods of low inflation. The impact of inflation on our property and operating expenses is limited since substantially all of our leases are net leases, and property-level expenses are generally paid by our tenants. To the extent we bear the cost of such expense, we attempt to limit our exposure to inflation through the use of warranties and other remedies that reduce the likelihood of a significant capital outlay. Inflation and increased costs may also have an adverse impact to our tenants and their creditworthiness if the increase in property-level expenses is greater than their increase in revenues.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of March 31, 2020, or December 31, 2019.

Contractual Obligations

The following table provides information with respect to our contractual commitments and obligations as of March 31, 2020 (in thousands).

Year of Maturity	Term Loans^(a)		Revolving Credit Facility^(b)		Senior Notes		Mortgages and Notes Payable		Interest Expense^(c)		Tenant Improvement Allowances^(d)		Operating Leases		Total
Remainder of 2020	$	—	$	—	$	—	$	2,401	$	58,412	$	2,219	$	534	$	63,566
2021		240,000		—		—		18,006		72,049		—		711		330,766
2022		60,000		353,300		—		2,907		60,773		—		686		477,666
2023		265,000		—		—		8,332		53,562		—		505		327,399
2024		190,000		—		—		2,260		49,454		—		120		241,834
Thereafter		450,000		—		475,000		76,912		122,555		—		2,411		1,126,878
Total	$	1,205,000	$	353,300	$	475,000	$	110,818	$	416,805	$	2,219	$	4,967	$	2,568,109

^(a)	Subsequent to quarter end, we gave notice that we were exercising the first of two six-month options to extend the maturity date of the 2020 Unsecured Term Loan, effective as of August 2, 2020, to February 2, 2021. Accordingly, we have included principal repayment of this loan in 2021.

^(b)	We may extend the Revolving Credit Facility once, for a five-month period, subject to certain conditions, including the payment of an extension fee equal to 0.0625% of the revolving commitments.

^(c)	Interest expense is projected based on the outstanding borrowings and interest rates in effect as of March 31, 2020. This amount includes the impact of interest rate swap agreements.

^(d)	We expect to pay tenant improvement allowances out of cash flows from operations or from additional borrowings.

At March 31, 2020 and December 31, 2019, investment in rental property of $176.8 million and $178.7 million, respectively, was pl edged as collateral against our mortgages and notes payable.

Additionally, we are a party to three separate tax protection agreements with the contributing members of three distinct UPREIT transactions and we entered into the Founding Owners’ Tax Protection Agreement with our founding owners in connection with the Internalization. The tax protection agreements require us to indemnify the beneficiaries in the event of a sale, exchange, transfer, or other disposal of the contributed property, or in the case of the Founding Owners’ Tax Protection Agreement, the entire Company, in a taxable transaction that would cause such beneficiaries to recognize a gain that is protected under the agreements, subject to certain exceptions. Based on values as of March 31, 2020, taxable sales of the applicable properties would trigger liability under the four agreements of approximately $22.3 million. Based on information available, we do not believe that the events resulting in damages as detailed above have occurred or are likely to occur in the foreseeable future. Accordingly, we have excluded these commitments from the contractual commitments table above.

Critical Accounting Policies

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and ~~judgments~~assumptions that affect the reported amounts of assets, liabilities, revenues, and ~~expenses. Management bases~~expenses as well as other disclosures in the financial statements. On an ongoing basis, management evaluates its estimates ~~on historical experience~~ and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actualassumptions; however, actual results may differ from these estimates ~~under different~~and assumptions, ~~or conditions.~~

~~As discussed~~which in turn could have a material impact on our financial statements. A summary of our significant accounting policies and procedures are included in Note 2, “Summary of Significant Accounting Policies,” in the Notes to the Condensed Consolidated Financial Statements included ~~elsewhere~~ in this filing, during the three months ended March 31, 2019, we adopted the provisions of ASC 842, which resulted in a change to the critical accounting policy with respect to revenue recognition that had been disclosed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2018

Quarterly Report on Form ~~10-K.~~10-Q. We believe there have been no ~~other~~ significant changes during the three months ended March 31, ~~2019,~~2020, to the items that we disclosed as our critical accounting policies in our ~~2018~~2019 Annual report on Form 10-K.

Impact of Recent Accounting Pronouncements

For information on the impact of recent accounting pronouncements on our business, see Note 2 of the Notes to the Condensed Consolidated Financial Statements included in this Form 10-Q.

Determined Share Value

Historically, we have sold shares of common stock in a private offering at a price equal to the Determined Share Value (“DSV”), which was established at least quarterly by the board of directors based on the net asset value (“NAV”) of our portfolio, input from management and third-party consultants, and such other factors as the board of directors may determine. The DSV was historically used for purchases, distribution reinvestment, and redemptions. On January 10, 2020, we suspended our private offering of our common stock until further notice and terminated our dividend reinvestment plan (“DRIP”) and share redemption program as of February 10, 2020.

At its May 7, 2020, meeting, our board of directors voted to set the DSV at $82.00 per share until July 31, 2020, compared to the prior DSV of $85 per share. The Company’s NAV calculation as of March 31, 2020 was consistently calculated using the Company’s established valuation process, starting with an estimate of the fair value of the properties in the portfolio as of that date based upon, among other factors, the implied market price for each asset based upon our review of market capitalization rates. The Company did not adjust the values of its real estate assets to estimate any potential impact from the COVID-19 pandemic on its portfolio as of March 31, 2020.

The decline in the Company’s NAV during the first quarter was due to a decrease in the estimated value of the Company’s real estate investments (driven mainly by downward adjustments to fair value associated with properties leased to our largest tenant, who declared bankruptcy in March, and current quarter disposition activity), combined with a decline in market interest rates during the first quarter, which led to an increase in our estimated fair value of debt (and a corresponding decline in NAV). Additional information regarding our valuation policy and procedures, including significant assumptions used to value our real estate portfolio and corresponding sensitivity disclosures, and the determination of the DSV by the board of directors, is available in Item 5. “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities,” in our 2019 Annual Report on Form 10-K filed with the SEC on February 27, 2020, under the heading Determined Share Value.

Period	NAV as of	NAV per diluted share		Determined Share Value
May 1, 2020 - July 31, 2020	March 31, 2020	$	82.46	$	82.00
February 1, 2020 - April 30, 2020	December 31, 2019	$	85.21	$	85.00
November 1, 2019 - January 31, 2020	September 30, 2019	$	84.12	$	85.00

The adjustments made to NAV per diluted share in arriving at the Determined Share Value for the periods presented above account for the inherent imprecision in the valuation estimates.

The following table provides a breakdown of the major components of our estimated NAV and NAV per diluted share amounts (in thousands, except per share amounts):

(in thousands, except per share amounts) NAV as of:	March 31, 2020			December 31, 2019
Investment in rental property	$	4,344,570		$	4,427,567
Debt		(2,233,159	)		(2,047,860	)
Other assets and liabilities, net		355,113			(16,149	)
NAV	$	2,466,524		$	2,363,558
Number of outstanding shares, including noncontrolling interests		29,912			27,738
NAV per diluted share	$	82.46		$	85.21

The following table details the implied market capitalization rates (shown on a weighted average basis) used to value the investment in rental property, by property type, as of March 31, 2020, and December 31, 2019, supporting the Determined Share Value in effect for the periods of May 1, 2020 through July 31, 2020, and February 1, 2020, through April 30, 2020, respectively:

Market capitalization rates, as of:

Industrial

Healthcare

Restaurant

Office

Retail

Other

Portfolio

Total

March 31, 2020

6.75

6.73

6.09

7.09

8.02

6.32

6.76

December 31, 2019

6.71

6.75

6.05

7.09

7.01

6.40

6.66

While we believe our assumptions are reasonable, a change in these assumptions would impact the calculation of the value of our real estate investments. For example, assuming all other factors remain unchanged, an increase in the weighted average implied market capitalization rate used as of March 31, 2020, of 0.25% would result in a decrease in the fair value of our investment in rental property of 3.6%, and our NAV per diluted share would have been $77.27. Conversely, a decrease in the weighted average implied capitalization rate used as of March 31, 2020, of 0.25% would result in an increase in the fair value of our investment in rental property of 3.8%, and our NAV per diluted share would have been $88.05.

Additionally, the ongoing COVID-19 pandemic, together with the restrictions on travel and other measures enacted in response to the pandemic, has had and will continue to have a significant adverse impact on our tenants’ operations and the value of our properties for an unknown period of time. Given the reliance on historical information when valuing a property and the number of unknown variables with respect to the COVID-19 pandemic at this time, the impact of the pandemic on a particular property will likely not be reflected in a property-level valuation for several calendar quarters. Additionally, when conducting property-level valuations, management and our third-party consultants and appraisers utilize available sales data, such as purchase price, from transactions involving comparable assets. Given the current economic downturn and significant reduction in real estate transactions, it is likely that we will be unable to obtain or utilize comparable sales data as part of our valuation process for several calendar quarters, which further impedes our ability to conduct accurate valuations. Accordingly, the current Determined Share Value does not accurately reflect the impact of the COVID-19 pandemic on the value of our shares as of the date of this filing. The board of directors will continue to utilize all available valuation information when setting the DSV in future periods as the impacts of the COVID-19 pandemic on real estate asset values continues to unfold.

Distributions and Distribution Reinvestment

At its May 7, 2020 meeting, our board of directors undertook a full review of our rent collection results for April, preliminary collection results for May, our outlook for collections in future months, and our overall liquidity position. Given the economic uncertainty and rapidly evolving circumstances related to the COVID-19 pandemic and current tenant rent relief requests, to preserve cash and strengthen our liquidity position, the board determined that it would temporarily suspend our monthly distribution. The previously announced distribution of $0.44 per common share and OP Unit for the month of April will remain payable on May 15, 2020. The board of directors will re-evaluate whether or not to reinstate a distribution at its August 2020 meeting. In connection with that re-evaluation, the board will consider the impact the COVID-19 pandemic has had on the Company’s results of operations through that time and, based upon the Company’s determination of its progress against its growth initiatives, will also evaluate the appropriate payout ratio and payment frequency for any future distributions. We intend to maintain BNL’s REIT status, and intend to make a special distribution in 2020 if it becomes necessary to do so based on the ultimate decisions with respect to future distributions.

We terminated our DRIP and share redemption program, effective February 10, 2020. Prior to its termination, pursuant to the terms of our DRIP, stockholders and OP Unit holders (other than us), could elect to have cash distributions reinvested in additional shares of our common stock. Shares of our common stock acquired through our DRIP have the same rights and are subject to the same restrictions on transferability as all other shares of our common stock.

The following table summarizes distributions paid in cash and pursuant to our DRIP for the three months ended March 31, 2020 (in thousands).

Month	Year	Cash Distribution - Common Stockholders		Cash Distribution - Membership Units		Distribution Paid Pursuant to DRIP on Common Stock ^(a)		Distribution Paid Pursuant to DRIP on Membership Units ^(a)		Total Amount of Distribution
January	2020	$	5,663	$	632	$	5,734	$	133	$	12,162
February	2020		11,472		764		—		—		12,236
March	2020		11,815		1,345		—		—		13,160
Total		$	28,950	$	2,741	$	5,734	$	133	$	37,558

^(a)	Distributions are paid in shares of common stock.

The following table summarizes our distributions paid, including the source of distributions and a comparison against FFO (in thousands). Refer to Net Income and Non-GAAP Measures (FFO and AFFO) below for further discussion of our FFO.

	For the three months ended
	March 31,
	2020		2019
Distributions:
Paid in cash	$	31,824	$	16,419
Reinvested in shares		5,734		14,533
Total Distributions	$	37,558	$	30,952
Source of Distributions:
Cash flow from operating activities	$	37,558	$	30,952
FFO	$	37,572	$	38,949

We intend to fund future distributions from cash generated by operations; however, we may fund distributions from the sale of assets, borrowings, or proceeds from the sale of our securities.

Item 3.

Quantitative and ~~Qualitative~~Qualitative Disclosures About Market Risk

We are exposed to certain market risks, one of the most predominant of which is a change in interest ~~rate risk arising from changes~~rates. Increases in interest rates ~~on the floating-rate indebtedness~~can result in increased interest expense under our ~~unsecured credit facilities~~Revolving Credit Facility and a certain mortgage. Borrowings pursuant to our unsecured credit facilities and the floating-rate mortgage bear interest at floating rates based on LIBOR plus an applicable margin. Accordingly, fluctuationsother variable-rate debt. Increases in ~~market~~ interest rates ~~may increase or decrease our~~can also result in increased interest expense ~~which will in turn, increase or decrease~~when our ~~net income~~fixed rate debt matures and ~~cash flow.~~

needs to be refinanced. We attempt to manage ~~a portion of our~~ interest rate risk by entering into long-term fixed rate debt or by entering into interest rate ~~swap agreements. Our interest rate risk management strategy is intended to stabilize cash flow requirements by maintaining interest rate swap agreements~~swaps to convert certain variable-rate debt to a fixed rate. As of March 31, 2019, we had 28 interest rate swap agreements outstanding, in an aggregate notional amount of $760.0 million. Under these agreements, we receive monthly payments from the counterparties equal to the related variable interest rates multiplied by the outstanding notional amounts. In turn, we pay the counterparties each month an amount equal to a fixed interest rate multiplied by the related outstanding notional amounts. The intended net impact of these transactions is that we pay a fixed interest rate on our variable-rate borrowings. The interest rate swaps have been designated by us as cash flow hedges for accounting purposes and are reported at fair value. We ~~assess, both at inception and on an ongoing basis, the effectiveness of our qualifying cash flow hedges. We~~ have not entered, and do not intend to enter, into derivative or interest rate transactions for speculative purposes. Further information concerning our interest rate swaps can be found in Note 11 in our Condensed Consolidated Financial Statements contained elsewhere in this Quarterly Report on Form 10-Q.

~~The table below summarizes~~Our fixed-rate debt includes our Senior Notes, mortgages, and variable-rate debt converted to a fixed rate with the ~~terms~~use of interest rate swaps. Our fixed-rate debt and outstanding interest rate swaps had carrying values and fair values of approximately $1.6 billion, as of March 31, 2020. Changes in market interest rates impact the fair value of our fixed-rate debt and interest rate swaps, but they have no impact on interest incurred or on cash flows. For instance, if interest rates were to increase 1%, and the fixed-rate debt balance were to remain constant, we would expect the fair value of our debt to decrease, similar to how the price of a bond decreases as interest rates rise. A 1% increase in market interest rates would have resulted in a decrease in the fair value of our fixed-rate debt and interest rate swaps of approximately $85.4 million as of March 31, 2020.

Borrowings pursuant to our Revolving Credit Facility and other variable-rate debt bear interest at rates based on LIBOR plus an applicable margin, and totaled $1.6 billion as of March 31, 2020, of which $909.9 million was swapped to a fixed rate by our use of interest rate swaps. Taking into account the effect of our interest rate ~~swap agreements at~~swaps, interest expense would have increased by approximately $1.4 million in the three months ended March 31, ~~2019.~~

(in thousands, except interest rates)

Counterparty

Maturity Date

Fixed Rate

Variable Rate Index

Notional
Amount

Fair Value

Bank of America, N.A.

November 2023

2.80
%

one-month LIBOR

$
25,000

$
(699
)
Bank of Montreal

July 2024

1.16
%

one-month LIBOR

40,000

2,048

Bank of Montreal

January 2025

1.91
%

one-month LIBOR

25,000

361

Bank of Montreal

July 2025

2.32
%

one-month LIBOR

25,000

(207
)
Bank of Montreal

January 2026

1.92
%

one-month LIBOR

25,000

433

Bank of Montreal

January 2026

2.05
%

one-month LIBOR

40,000

366

Bank of Montreal

December 2026

2.33
%

one-month LIBOR

10,000

(83
)
Bank of Montreal

December 2027

2.37
%

one-month LIBOR

25,000

(247
)
Capital One, N.A.

December 2021

1.05
%

one-month LIBOR

15,000

455

Capital One, N.A.

December 2024

1.58
%

one-month LIBOR

15,000

472

Capital One, N.A.

January 2026

2.08
%

one-month LIBOR

35,000

243

Capital One, N.A.

July 2026

1.32
%

one-month LIBOR

35,000

2,099

Capital One, N.A.

December 2027

2.37
%

one-month LIBOR

25,000

(265
)
Capital One, N.A.

April 2026

2.68
%

one-month LIBOR

15,000

(481
)
M&T Bank

August 2021

1.02
%

one-month LIBOR

5,016

134

M&T Bank

September 2022

2.83
%

one-month LIBOR

25,000

(564
)
M&T Bank

November 2023

2.65
%

one-month LIBOR

25,000

(551
)
Regions Bank

May 2020

2.12
%

one-month LIBOR

50,000

137

Regions Bank

December 2023

1.18
%

one-month LIBOR

25,000

1,108

SunTrust Bank

April 2024

1.99
%

one-month LIBOR

25,000

192

SunTrust Bank

April 2025

2.20
%

one-month LIBOR

25,000

(44
)
SunTrust Bank

July 2025

1.99
%

one-month LIBOR

25,000

276

SunTrust Bank

December 2025

2.30
%

one-month LIBOR

25,000

(176
)
SunTrust Bank

January 2026

1.93
%

one-month LIBOR

25,000

413

Wells Fargo Bank, N.A.

February 2021

2.39
%

one-month LIBOR

35,000

(85
)
Wells Fargo Bank, N.A.

October 2024

2.72
%

one-month LIBOR

15,000

(436
)
Wells Fargo Bank, N.A.

January 2028

2.37
%

one-month LIBOR

75,000

(777
)
Wells Fargo Bank, N.A.

April 2027

2.72
%

one-month LIBOR

25,000

(934
)

$
760,016

$
3,188

2020, if the applicable LIBOR rate had been 1% higher.

With the exception of our interest rate swap transactions, we have not engaged in transactions in derivative financial instruments or derivative commodity instruments.

As of March 31, ~~2019,~~2020, our financial instruments were not exposed to significant market risk due to foreign currency exchange risk.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the ~~Securities~~ Exchange Act, ~~of 1934, as amended (the “Exchange Act”)),~~ that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of and for the quarter ended March 31, ~~2019,~~2020, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective and were operating at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

~~There were no changes~~As a result of our Internalization on February 7, 2020, we implemented internal controls over financial reporting to consider the management functions previously performed by our third-party manager. The Internalization represents a material change in internal control over financial reporting subsequent to management’s last assessment of our internal control over financial reporting, ~~that occurred~~which was completed on December 31, 2019.

There have been no other changes in our internal control over financial reporting during the ~~quarter~~three months ended March 31, ~~2019,~~2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II – OTHER INFORMATION

Item 1.

Legal Proceedings.

~~From time to time, we~~We are subject to various legal proceedings and claims that arise in the ordinary course of our business. These matters are generally covered by insurance or are subject to our right to be indemnified by our tenants that we include in our leases. Management is not aware of any material pending legal proceedings to which we or any of our subsidiaries are a party or to which any of our property is subject, nor are we aware of any such legal proceedings contemplated by government agencies.

Item 1A.

Risk Factors.

~~There~~Other than the addition of the text below, there have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussion of the Company’s risk factors under Part I, Item 1A. in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Actual or perceived threats associated with epidemics, pandemics or public health crises, including the COVID-19 pandemic, could have a material adverse effect on our results of operations and the businesses of our tenants.

Since its discovery in December 2019, a novel strain of coronavirus, which causes the viral disease known as COVID-19, has spread throughout most countries in the world, including the United States. This outbreak, which has since been declared a pandemic by the World Health Organization, has negatively impacted regional and global economic activity and contributed to volatility in financial markets throughout the world. Additionally, in response to the COVID-19 pandemic, many countries and U.S. states, including the areas in which we operate, have adopted certain measures to mitigate the ongoing public health crises. Such measures include “shelter in place” or “stay at home” rules, restrictions on travel, and restrictions on the types of businesses that may continue to operate in many countries and U.S. states. The COVID-19 pandemic has negatively impacted nearly every industry directly or indirectly.

The COVID-19 pandemic, and future epidemics, pandemics, and other public health crises could materially and adversely affect our and our tenants’ results of operations, liquidity, and ability to access capital markets or pay distributions due to, among other factors:

an ongoing reduction in general economic activity, which may cause one or more of our tenants to be unable to maintain profitability and make timely rental payments to us pursuant to their leases, or to declare bankruptcy;

an increase in property vacancies could result in our obligation to pay the associated real estate taxes, insurance, and general property operating expenses;

a continuing complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action;

delays in the supply of material products or services to us or our tenants from vendors;

a reduction in our tenants’ available workforce as a result of local, state or federal “shelter in place” or “stay at home” rules and restrictions;

indications of a tenant’s inability to continue as a going concern, changes in our view of strategy relative to a tenant’s business or industry, or changes in our long-term hold strategies, which could be indicative of an impairment triggering event with respect to a particular property or properties;

a general decline in business activity and demand for real estate transactions, which could adversely affect our ability to grow our portfolio or sell properties upon desirable terms;

difficulty accessing debt and equity capital on attractive terms, if at all; and

an inability to maintain compliance with financial covenants of credit facility and other loan agreements, which may result in a default of such arrangements and potentially result in an acceleration of indebtedness, or increased interest expense should a waiver be required from the lending institutions.

The extent to which the COVID-19 pandemic impacts our investments and operations will depend on future developments, including, among others, the duration of the outbreak, new information that may emerge concerning the severity of COVID-19, and the actions taken to contain the COVID-19 pandemic or treat the disease. These developments and the full impact of the COVID-19 pandemic on our business are highly uncertain and cannot be predicted with confidence. Nevertheless, the COVID-19 pandemic and any future epidemics, pandemics or public health crises could materially and adversely affect our business, financial condition, liquidity and results of operations, as well as our ability to pay distributions to our stockholders, for the reasons discussed above. In particular, the following risk factors previously disclosed in our Annual Report on Form 10-K are updated as follows:

The failure of one or more of our tenants to pay rent due to the market disruption caused by the COVID-19 outbreak or any other reason could materially and adversely affect us, including our results of operations.

Our performance depends on the financial condition of our tenants and their ability to fulfill their lease obligations by paying rent in a timely manner. The outbreak has adversely affected our tenants’ businesses generally. As of April 30, 2020, we have received requests for rent relief from 36.3% of our tenants based on ABR. Although the requests range in scope, the most common request is for a full or partial rent deferment for three months, with repayment over a six to 12-month period following the reinstatement of regular rent payments. In certain cases, we are also negotiating for lease extensions or the early exercise of a tenant renewal option in addition to the repayment of the deferred rent. We have not agreed to any rent forgiveness or permanent abatement and are only negotiating rent deferrals. However, we cannot predict the ultimate resolution of these discussions with our tenants or whether any such negotiations could break down in the future and result in any such tenants refusing to pay all or a substantial portion of the rent due under their leases. The duration of the COVID-19 pandemic and our tenants’ ability to return to business after governmental restrictions are lifted will have a significant impact on our ability to continue to collect rents, and any material disruption in our ability to collect rents could have a material adverse impact on our business and results of operations.

General economic disruption resulting from the COVID-19 pandemic could result in a reduction in the willingness or ability of consumers to use their discretionary income in the businesses of our tenants and potential tenants, which could reduce the demand for our properties and in turn could materially and adversely affect us.

A significant portion of our portfolio is leased to tenants operating businesses at our properties that rely on discretionary consumer spending. Restaurants (including quick service and casual and family dining) represent a material portion of our portfolio and the highest proportion of tenants seeking rent relief at this time are in the restaurant sector. Red Lobster Hospitality, Jack’s Family Restaurants, Outback Steakhouse, and Krispy Kreme are among the most significant tenants in our portfolio. The success of most of these businesses depends on the willingness of consumers to use discretionary income to purchase their products or services. A downturn in the economy resulting from the COVID-19 pandemic could cause consumers to reduce their discretionary spending, which could result in tenant bankruptcies or otherwise have an adverse impact on our tenants’ ability to successfully manage their businesses and pay us amounts due under our lease agreements, thereby materially and adversely affecting us.

More generally, if the pandemic results in a period of economic slowdown, rising interest rates and declining demand for real estate, then it may cause a general decline in rents or an increased incidence of defaults under existing leases. A lack of demand for rental space could adversely affect our ability to maintain our current tenants and gain new tenants, which may affect our growth and results of operations. Accordingly, a general decline in economic conditions resulting from the COVID-19 pandemic could materially and adversely affect us.

Legal restrictions intended to mitigate the impact of COVID-19 could have a particularly adverse impact on the restaurant and retail industries, which may materially and adversely affect us.

The legal restrictions adopted by many U.S. states to mitigate the ongoing public health crises related to COVID-19, including “shelter in place” and “stay at home” rules, restrictions on travel, and restrictions on the types of businesses that may continue to operate, have had a particularly acute negative economic impact on restaurant and retail businesses throughout the areas in which we operate. As of March 31, 2020, leases representing approximately 15.7% of our ABR were with tenants in the restaurant industry and 9.6% of our ABR were with tenants in the retail industry. Accordingly, decreases in the demand for restaurant and/or retail spaces may have a greater adverse effect on us than if we had fewer investments in these industries. For example, if there is an increase in the number of companies in the restaurant industry that declare bankruptcy, go out of business, or significantly reduce the number of their locations as a result of the pandemic, then we are likely to experience challenges with our restaurant tenants, and may record asset impairments on certain assets as a result of increased credit losses. To the extent that economic conditions continue to deteriorate in the retail and restaurant industries, they are likely to negatively affect market rents for such properties and could materially and adversely affect us.

Decreases in real estate transaction activity resulting from the COVID-19 pandemic may materially inhibit our ability to achieve growth through acquisitions at a rate that is comparable to our historical results, which could materially and adversely affect us.

Although the long-term impact of the COVID-19 pandemic on investment sales markets is currently difficult to predict, the disruption from the pandemic thus far has resulted in a significant decrease in real estate investment sales. Our growth strategy depends significantly on acquiring new properties. Since 2015, our team has acquired more than $500 million of net leased real estate each year, with approximately $1 billion during 2019. The Company did not complete any acquisitions during the three months ended March 31, 2020, which increases the risk of lower overall acquisition activity for the full year given the ongoing impact of the COVID-19 pandemic. Our ability to grow requires us to identify and complete acquisitions that meet our investment criteria. Changes in the volume of real estate investment sales, or our ability to access acquisition financing, resulting from the COVID-19 pandemic may negatively impact our acquisition opportunities, and if we are unable to achieve growth through acquisitions at a rate that is comparable to our historical results, it could materially and adversely affect us.

The Determined Share Value is not directly derived from any independent valuation or from the value of the existing property portfolio. Investors should use caution in using the Determined Share Value as the current value of shares of our common stock.

Historically, shares of our common stock have been sold by us in a private offering at a price per share equal to what we refer to as the current Determined Share Value, which is established at least quarterly by our Board of Directors based on the net asset value of the portfolio, input from management and third-party consultants, and such other factors ~~set forth~~as the Board of Directors may, in its sole discretion, determine. Our net assets are primarily comprised of our ~~Form 10-K.~~investment in real property and debt, as well as other assets and liabilities such as cash, interest rate swaps, and accounts payable. The values ascribed to our mortgages and unsecured notes are marked to market each quarter.

~~Item 2.~~

~~Unregistered Sales of Equity~~

The Board of Directors may, and currently does, engage third-party consultants, appraisers, and other real estate or investment professionals to assist in its establishment of the Determined Share Value, but the Board of Directors is not required to do so. As a result, the price of the shares of our common stock may not necessarily bear a direct relationship to our book or asset values or to any other established criteria for valuing issued or outstanding common stock and the actual value of an investor’s investment in shares of our common stock could be substantially more or less than what the stockholder may have paid to purchase the shares.

As with any valuation method, the methods used to determine the Determined Share Value are based upon a number of assumptions, estimates, and judgments that may not be accurate or complete. Our assets are valued based upon appraisal standards and the values of our assets using these methods are not required to be a reflection of market value and will not necessarily result in a reflection of fair value under GAAP. Different parties using different property-specific and general real estate and capital market assumptions, estimates, judgments, and standards could derive different Determined Share Values, which could be significantly different from the Determined Share Values determined by the Board of Directors. Additionally, valuation methods typically utilize historical property-level information. As a result, if a property is subject to an event or circumstances that impact property-level operations, there may be an inherent lag between the occurrence of such event and a correlative adjustment in an affected property’s valuation. Further, estimated values of our properties can change rapidly and significantly due to a variety of factors, including changes in interest rates, credit performance, perceived risk, supply, demand, and actual and projected cash flows. Any such changes could result in a change in Determined Share Value.

Accordingly, the Determined Share Value established as of any given time is not a direct representation or indication that, among other things, (i) a stockholder would be able to realize the full Determined Share Value if he or she attempts to sell their shares, (ii) a stockholder would ultimately realize distributions per share equal to the Determined Share Value upon liquidation of our assets and settlement of our liabilities or upon a sale of our company, (iii) shares of our common stock would trade at the Determined Share Value on a national securities exchange, (iv) a third party would offer the Determined Share Value in an arms-length transaction to purchase all or substantially all of our shares of common stock, or (v) the methodologies used to estimate the Determined Share Value would be acceptable to the requirements of any regulatory agency.

Finally, the ongoing COVID-19 pandemic, together with the restrictions on travel and other measures enacted in response to the pandemic, has had and will continue to have a significant adverse impact on our tenants’ operations and the value of our properties for an unknown period of time. Given the reliance on historical information when valuing a property and the number of unknown variables with respect to the COVID-19 pandemic at this time, the impact of the pandemic on a particular property will likely not be reflected in a property-level valuation for several calendar quarters. Additionally, when conducting property-level valuations, management and our third-party consultants and appraisers utilize available sales data, such as purchase price, from transactions involving comparable assets. Given the current economic downturn and significant reduction in real estate transactions, it is likely that we will be unable to obtain and/or utilize comparable sales data as part of our valuation process for several calendar quarters, which further impedes our ability to conduct accurate valuations. Accordingly, the current Determined Share Value does not accurately reflect the impact of the COVID-19 pandemic on the value of our shares as of the date of this filing.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

Sales of Common Stock and Issuance of ~~Membership~~OP Units

We commenced our ~~ongoing~~ private offering of shares of our common stock in 2007. The first closing of our private offering occurred on December 31, 2007, and we ~~have~~ conducted additional closings at least once every calendar quarter ~~since then. Currently,~~through December 31, 2019. On January 10, 2020, we ~~close sales~~announced that we suspended until further notice our private offering of ~~additional~~ shares of our common ~~stock monthly. In November 2017, we instituted a monthly equity cap and queue program for new and additional investments in our common~~ stock. The cap does not apply to investments made pursuant to our DRIP, or to equity capital received in connection with UPREIT transactions. On February 8, 2019, we announced that the equity cap had been set at $20.0 million for investments made in the months of February 2019 through April 2019, which cap will remain in effect for investments made in the months of May 2019 through July 2019.

~~If the total subscriptions for shares~~As of our common stock exceed the cap for a month, subscriptions will generally be accepted at that month’s closing in the order in which they were submitted. In our or the Asset Manager’s discretion, however, certain subscriptions may be given priority over other subscriptions based on factors other than the order of submission, including the size of the subscription, the size of a stockholder’s existing investment, whether the subscription was sourced through an existing or new intermediary relationship, and such other factors we or the Asset Manager may consider. Any subscription for shares that we do not accept at any closing may be held for two subsequent closings and, if so held, shall be treated as a continuing subscription to purchase any remaining shares at the two subsequent closings (and, if applicable, any additional subsequent closings resulting from the subscriber’s exercise of the renewal option discussed below) at the offering price then in effect. If we do not accept and request payment for all of the shares subscribed for at one of the first three closings after receipt of a subscription, the subscriber will have the option to renew its subscription for three additional closings and maintain its position in any equity subscription queue by providing written notice of the subscriber’s election to exercise such option. The same option will be available to the subscriber for each subsequent three-closing period.

~~For the three months ended~~ March 31, ~~2019, we sold 0.9~~2020, there were 26.9 million shares of our common stock ~~in our private offering,~~issued and outstanding, including ~~0.2~~0.8 million mezzanine equity common shares, ~~of common stock~~and 3.1 million OP Units issued pursuant to our DRIP, for gross offering proceeds of approximately $74.9 million. We intend to use substantially all of the net proceeds from our private offering, supplemented with additional borrowings, to continue to invest in additional net leased properties and ~~for general corporate purposes.~~outstanding, including 1.3 million mezzanine equity non-controlling interests.

The following table provides information regarding the sale of shares of our common stock pursuant to our ongoing private offering during the three months ended March 31, ~~2019~~2020 (in thousands, except year and Determined Share Value amounts).

Month

Year

Common
Shares
Sold

Weighted
Average
Determined
Share
Value —
Common
Shares^(a)

Total
Proceeds —
Common
Shares
Sold

Common
Shares
DRIP

Weighted
Average
Determined
Share
Value —
DRIP^(b)

Total
Proceeds —
Common
Share
DRIP^(c)

Total
Proceeds

January

2019

233

$
86.00

$
20,000

58

$
84.28

$
4,862

$
24,862

February

2019

235

$
85.00

20,000

58

$
84.28

4,930

24,930

March

2019

235

$
85.00

20,000

62

$
83.30

5,136

25,136

Total

703

$
60,000

178

$
14,928

$
74,928

Month

Year

Common

Sold

Weighted

Average

Determined

Value —

Common

Total

Proceeds —

Common

Sold

Common

DRIP

Weighted

Average

Determined

Value —

DRIP^(a)

Total

Proceeds —

Common

DRIP^(b)

Total

Proceeds

January

2020

—

83.30

5,865

^(a)	~~Shares of our common stock are sold in our ongoing private offering at a price per share equal to the then-applicable Determined Share Value.~~

^(b)	DRIP shares are purchased at a discounted price of 98% of the Determined Share Value.

^(c)(b)

For common shares reinvested under our DRIP there is no corresponding cash flow from the transaction. Refer to Note 1213 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion.

None of the shares of our common stock set forth in the table above were registered under the Securities Act in reliance upon the exemption from registration under the Securities Act provided by Rule 506(c) under Regulation D promulgated under the Securities Act. All of the shares of our common stock set forth in the table above were sold to persons ~~who~~each of whom represented to us in writing that ~~they~~such person qualified as an “Accredited Investor” as such term is defined by Regulation D promulgated under the Securities Act, and provided us with additional documentation to assist us in verifying such person’s status as an Accredited Investor.

In connection with property acquisitions that are structured as UPREIT transactions, the owner of a property will transfer its interest in the property to the OP in exchange for OP Units. There were no such OP Unit issuances during the quarter ended March 31, 2020.

None of the OP Units have been registered under the Securities Act in reliance upon the exemptions from registration under the Securities Act provided by Rule 506(c) under Regulation D promulgated under the Securities Act and Section 4(a)(2) of the Securities Act. All of the OP Units were issued to persons who represented to us in writing that they qualified as an Accredited Investor, and provided us with additional documentation to assist us in verifying such person’s status as an Accredited Investor, including third-party verification as permitted under Regulation D.

Internalization Consideration

In connection with the closing of the Internalization, on February 7, 2020, we issued 780,893 shares of our common stock to certain owners of BRE as merger consideration for an aggregate value of $66.4 million.

In connection with the Internalization, on February 7, 2020, the OP issued 1,319,513 OP Units to certain owners of BRE as merger consideration for an aggregate value of $112.2 million.

In each case, the aforementioned securities were issued in reliance on the exemption set forth in Section 4(a)(2) of the Securities Act.

Repurchases of Equity Securities

~~During~~We had adopted a share redemption program to provide an opportunity for our stockholders to have shares of our common stock repurchased, at the end of each quarter, subject to certain restrictions and limitations, at a price equal to or at a discount from the current Determined Share Value in effect as of the date the shares were tendered for redemption. Cash used to fund share redemptions had historically been provided through a combination of cash generated by operations, the sale of assets, and borrowings. On January 10, 2020, we announced that we terminated our share redemption program, effective as of February 10, 2020. Consequently, there were no redemptions of shares of our common stock during the three months ended March 31, ~~2019, we fulfilled repurchase requests and repurchased shares of our common stock pursuant to our share redemption program as follows.~~ 2020.

Period

Total Number
of Shares
Requested to be
Redeemed ^(a)

Total Number
of Shares
Redeemed

Average
Price Paid
Per Share ^(b)

Approximate Dollar
Value of Shares
Available That May
Yet Be Redeemed
Under the Program
January 2019

—

—

—

^(c)
February 2019

—

—

—

^(c)
March 2019

21,361

21,361

$
84.43

^(c)

^(a)

Repurchases of shares of our common stock pursuant to the share redemption program will be made quarterly, at the end of the quarter, upon written request to us delivered at least 10 calendar days prior to the last business day of the applicable calendar quarter, and the redemption price paid for redeemed shares will be paid in cash within three business days of the last business day of the applicable calendar quarter.

^(b)

Shares held for more than 12 months, but less than five years, will be redeemed at a purchase price equal to 95% of the Determined Share Value in effect as of the last business day of the quarter in which the shares are timely tendered for redemption and shares held for five years or more will be redeemed at a purchase price equal to 100% of the Determined Share Value in effect as of the last business day of the quarter in which the shares are timely tendered for redemption, subject to certain exceptions as set forth in the share redemption program.

^(c)

The total number of shares redeemed pursuant to the share redemption program in any quarter may not exceed (i) 1% of the total number of shares outstanding at the beginning of the applicable calendar year, plus (ii) 50% of the total number of any additional shares of our common stock issued during the prior calendar quarter pursuant to our DRIP; provided, however, that the total number of shares redeemed during any calendar year may not exceed 5% of the number of shares outstanding as of the first day of such calendar year.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

Not applicable.

Item 5.

Other Information.

The other information presented below is being filed as a result of the Company’s adoption of the new accounting guidance for lease accounting (“ASC 842”) on January 1, 2019. As part of that adoption, the Company elected the available practical expedient, for all classes of assets, not to separate lease components in contracts from the nonlease components in those contracts, when recording revenues associated with operating leases where it is the lessor. Since the lease component is the predominant component under the Company’s leases, combined revenues from both the lease and nonlease components are accounted for in accordance with ASC 842 and will be reported in all periods subsequent to the adoption of the new accounting guidance in a single caption, “Lease revenues,” on the Company’s Consolidated Statements of Income and Comprehensive Income. The presentation and disclosure of Lease revenues have been adjusted to reflect these changes for the quarter ended March 31, 2019. Refer to Note 2 of Part I, Item 1. “Financial Statements,” for further details on these updates to significant accounting policies.

This information is intended to assist investors in making comparisons of the Company’s historical financial information with future financial information. The reported financial information below has been revised to conform to the current presentation.

~~This table below summarizes total revenues as originally reported in the Consolidated Statements of Income and Comprehensive Income included the Company’s 2018 Annual Report on Form 10~~-~~K, as follows (in thousands):~~

~~As originally reported~~None.

For the years ended December 31,

2018

2017

2016

Revenues

Rental income from operating leases

$
222,208

$
170,493

$
133,943

Earned income from direct financing leases

3,941

4,141

4,544

Operating expenses reimbursed from tenants

11,221

6,721

4,173

Other income from real estate transactions

109

208

209

Total revenues

$
237,479

$
181,563

$
142,869

~~As revised~~

For the years ended December 31,

2018

2017

2016

Revenues

Lease revenues

$
237,479

$
181,563

$
142,869

Item 6.

Exhibits

No.		Description

2.1		Agreement and Plan of Merger, dated as of November 11, 2019, by and among Broadstone Net Lease, Inc., Broadstone Net Lease, LLC, Broadstone Net Lease Sub 1, Inc., Broadstone Net Lease Sub 2, Inc., Broadstone Real Estate, LLC, Trident BRE Holdings I, Inc., Trident BRE Holdings II, Inc. and, solely for purposes of Sections 6.18, 6.19 and 6.20, Trident BRE Holdings I, L.P. and Trident BRE Holdings II, L.P. (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 12, 2019 and incorporated herein by reference)

2.2		Amendment No. 1, dated February 7, 2020, to Agreement and Plan of Merger, dated as of November 11, 2019, by and among Broadstone Net Lease, Inc., Broadstone Net Lease, LLC, Broadstone Net Lease Sub 1, Inc., Broadstone Net Lease Sub 2, Inc., Broadstone Real Estate, LLC, Trident BRE Holdings I, Inc., Trident BRE Holdings II, Inc. and, solely for purposes of Sections 6.18, 6.19, and 6.20 of the Merger Agreement, Trident BRE Holdings I, L.P. and Trident BRE Holdings II, L.P. (filed as Exhibit 2.1 to the Corporation’s Current Report on Form 8-K filed February 7, 2020 and incorporated herein by reference)

3.1		Articles of Incorporation of Broadstone Net Lease, Inc. ~~(Incorporated herein by reference to~~(filed as Exhibit 3.1 to the ~~Company’s General Form for~~Corporation’s Registration ~~of Securities~~Statement on Form 10 filed on April 24, ~~2017)~~2017 and incorporated herein by reference)

3.2		Second Amended and Restated Bylaws of Broadstone Net Lease, Inc. ~~(Incorporated~~, adopted March 23, 2020 (filed as Exhibit 3.1 to the Corporation’s Current Report on Form 8-K filed March 25, 2020 and incorporated herein by ~~reference to Exhibit 3.2 to the Company’s General Form for Registration of Securities on Form 10, filed on April 24, 2017)~~reference)

4.1		~~Broadstone Net Lease, Inc. Distribution Reinvestment Plan (Incorporated herein by reference to~~Description of the Corporation’s Securities (filed as Exhibit 4.1 to the ~~Company’s General Form for Registration of Securities~~Corporation’s Annual Report on Form ~~10,~~10-K filed ~~on April 24, 2017)~~

~~4.2~~		~~Broadstone Net Lease, Inc. Share Redemption Program (Incorporated~~February 27, 2020 and incorporated herein by ~~reference to Exhibit 4.2 to the Company’s Amendment No. 2 to the General Form for Registration of Securities on Form 10, filed on June 29, 2017)~~reference)

10.1		Term Loan Agreement, dated February ~~27, 2019,~~7, 2020, by and among Broadstone Net Lease, ~~Inc.,~~LLC, Broadstone Net Lease, ~~Capital One, National Association,~~Inc., JPMorgan Chase Bank, N.A., and the other ~~parties~~lenders party thereto ~~(Incorporated herein by reference to~~(filed as Exhibit 10.1 to the ~~Company’s~~Corporation’s Current Report on Form 8-K filed ~~on March 5, 2019)~~February 7, 2020 and incorporated herein by reference)

10.2		~~First Amendment Regarding Commitment Increases,~~Guaranty, dated February ~~28, 2019,~~7, 2020, by ~~and among~~ Broadstone Net Lease, Inc.~~, Broadstone Net Lease, LLC, Manufacturers and Traders Trust Company and the other parties thereto (Incorporated herein by reference to~~ in favor of JPMorgan Chase Bank, N.A. (filed as Exhibit 10.2 to the ~~Company’s~~Corporation’s Current Report on Form 8-K filed ~~on March 5, 2019)~~February 7, 2020 and incorporated herein by reference)

10.3		~~Guaranty,~~Tax Protection Agreement, dated February ~~27, 2019, by~~7, 2020, between Broadstone Net Lease, Inc. ~~in favor of Capital One, National Association (Incorporated herein by reference to~~, Broadstone Net Lease, LLC, and the persons named therein (filed as Exhibit 10.3 to the ~~Company’s~~Corporation’s Current Report on Form 8-K filed February 7, 2020 and incorporated herein by reference)

10.4		Registration Rights Agreement, dated February 7, 2020, between Broadstone Net Lease, Inc. and the persons named therein (filed as Exhibit 10.4 to the Corporation’s Current Report on ~~March 5, 2019)~~Form 8-K filed February 7, 2020 and incorporated herein by reference)

10.5		Amendment No. 1, dated February 7, 2020 to the Amended and Restated Operating Agreement of Broadstone Net Lease, LLC (filed as Exhibit 10.5 to the Corporation’s Current Report on Form 8-K filed February 7, 2020 and incorporated herein by reference)

10.6		Amended and Restated Operating Agreement of Broadstone Net Lease, LLC, dated December 31, 2007 (filed as Exhibit 10.6 to the Corporation’s Current Report on Form 8-K filed February 7, 2020 and incorporated herein by reference)

10.7+		Amended and Restated Employment Agreement, effective February 7, 2020, by and between Broadstone Net Lease, Inc., Broadstone Net Lease, LLC, Broadstone Employee Sub, LLC, and Christopher J. Czarnecki (filed as Exhibit 10.7 to the Corporation’s Current Report on Form 8-K filed February 7, 2020 and incorporated herein by reference)

10.8+		Amended and Restated Employment Agreement, effective February 7, 2020, by and between Broadstone Net Lease, Inc., Broadstone Net Lease, LLC, Broadstone Employee Sub, LLC, and Ryan M. Albano (filed as Exhibit 10.8 to the Corporation’s Current Report on Form 8-K filed February 7, 2020 and incorporated herein by reference)

10.9+		Amended and Restated Employment Agreement, effective February 7, 2020, by and between Broadstone Net Lease, Inc., Broadstone Net Lease, LLC, Broadstone Employee Sub, LLC, and Sean T. Cutt (filed as Exhibit 10.9 to the Corporation’s Current Report on Form 8-K filed February 7, 2020 and incorporated herein by reference)

No.		Description
10.10+		Amended and Restated Employment Agreement, effective February 7, 2020, by and between Broadstone Net Lease, Inc., Broadstone Net Lease, LLC, Broadstone Employee Sub, LLC, and John D. Moragne (filed as Exhibit 10.10 to the Corporation’s Current Report on Form 8-K filed February 7, 2020 and incorporated herein by reference)

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ~~(filed herewith)~~

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ~~(filed herewith)~~

32.1*†		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(furnished herewith)~~

32.2*†		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(furnished herewith)~~

101.1		The following materials from the ~~Company’s~~Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2019,~~2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income and Comprehensive (Loss) Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity and Mezzanine Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements

*	Filed herewith.

+	Management contract or compensatory plan or arrangement.

†

In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

~~SIGNAT~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BROADSTONE NET LEASE, INC.

Date: May 7, ~~2019~~2020		/s/ Christopher J. Czarnecki
		Christopher J. Czarnecki
		Chief Executive Officer and President

Date: May 7, ~~2019~~2020		/s/ Ryan M. Albano
		Ryan M. Albano
		Executive Vice President and Chief Financial Officer

5156

Maryland	26-1516177
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

	March 31, 2019			December 31, 2018
Assets
Accounted for using the operating method, net of accumulated depreciation	$	2,682,996		$	2,641,746
Accounted for using the direct financing method		41,975			42,000
Investment in rental property, net		2,724,971			2,683,746
Cash and cash equivalents		11,726			18,612
Restricted cash		1,434			377
Accrued rental income		73,618			69,247
Tenant and other receivables, net		1,376			1,026
Tenant and capital reserves		1,149			1,136
Prepaid expenses and other assets		4,821			2,803
Interest rate swap, assets		8,737			17,633
Intangible lease assets, net		287,189			286,258
Debt issuance costs – unsecured revolver, net		3,277			2,261
Leasing fees, net		13,645			13,698
Total assets	$	3,131,943		$	3,096,797

Liabilities and equity
Unsecured revolver	$	139,900		$	141,100
Mortgages and notes payable, net		72,004			78,952
Unsecured term notes, net		1,222,095			1,225,773
Interest rate swap, liabilities		5,549			1,820
Accounts payable and other liabilities		24,149			22,269
Due to related parties		52			114
Tenant improvement allowances		2,697			2,125
Accrued interest payable		8,391			9,777
Intangible lease liabilities, net		85,080			85,947
Total liabilities		1,559,917			1,567,877

Commitments and contingencies (See Note 15)

Equity
Broadstone Net Lease, Inc. stockholders' equity:
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued or outstanding		—			—
Common stock, $0.001 par value; 80,000 shares authorized, 22,876 and 22,014 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively		23			22
Additional paid-in capital		1,630,417			1,557,421
Subscriptions receivable		(225	)		—
Cumulative distributions in excess of retained earnings		(170,847	)		(155,150	)
Accumulated other comprehensive income		3,018			14,806
Total Broadstone Net Lease, Inc. stockholders’ equity		1,462,386			1,417,099
Non-controlling interests		109,640			111,821
Total equity		1,572,026			1,528,920
Total liabilities and equity	$	3,131,943		$	3,096,797

	March 31, 2020			December 31, 2019
Assets
Accounted for using the operating method, net of accumulated depreciation	$	3,367,566		$	3,415,400
Accounted for using the direct financing method		39,961			41,890
Investment in rental property, net		3,407,527			3,457,290
Cash and cash equivalents		93,151			12,455
Accrued rental income		84,932			84,534
Tenant and other receivables, net		1,287			934
Prepaid expenses and other assets		12,397			12,613
Interest rate swap, assets		—			2,911
Goodwill		339,769			—
Intangible lease assets, net		320,418			331,894
Debt issuance costs – unsecured revolving credit facility, net		2,081			2,380
Leasing fees, net		12,492			12,847
Total assets	$	4,274,054		$	3,917,858

Liabilities, mezzanine equity and equity
Unsecured revolving credit facility	$	353,300		$	197,300
Mortgages and notes payable, net		110,464			111,793
Unsecured term notes, net		1,672,587			1,672,081
Interest rate swap, liabilities		79,622			24,471
Earnout liability		44,296			—
Accounts payable and other liabilities		35,835			37,377
Accrued interest payable		9,764			3,594
Intangible lease liabilities, net		89,673			92,222
Total liabilities		2,395,541			2,138,838

Commitments and contingencies (See Note 16)

Mezzanine equity
Common stock, 781 shares issued and outstanding at March 31, 2020		66,376			—
Non-controlling interests		112,158			—
Total mezzanine equity		178,534			—

Equity
Broadstone Net Lease, Inc. stockholders' equity:
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued or outstanding		—			—
Common stock, $0.001 par value; 80,000 shares authorized, 26,074 and 26,001 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		26			26
Additional paid-in capital		1,899,616			1,895,935
Cumulative distributions in excess of retained earnings		(233,067	)		(208,261	)
Accumulated other comprehensive loss		(73,138	)		(20,086	)
Total Broadstone Net Lease, Inc. stockholders’ equity		1,593,437			1,667,614
Non-controlling interests		106,542			111,406
Total equity		1,699,979			1,779,020
Total liabilities, mezzanine equity and equity	$	4,274,054		$	3,917,858

	Common Stock		Additional Paid-in Capital			Subscriptions Receivable			Cumulative Distributions in Excess of Retained Earnings			Accumulated Other Comprehensive Income		Non- controlling Interests			Total
Balance, January 1, 2018	$	19	$	1,301,979		$	(15	)	$	(120,280	)	$	5,122	$	97,376		$	1,284,201
Net income		—		—			—			17,573			—		1,422			18,995
Issuance of 710 shares of common stock		1		57,154			(129	)		—			—		—			57,026
Other offering costs		—		(224	)		—			—			—		—			(224	)
Distributions declared ($0.415 per share January 2018, $0.43 per share February through March 2018)		—		—			—			(24,476	)		—		(2,472	)		(26,948	)
Change in fair value of interest rate swap agreements		—		—			—			—			15,685		1,270			16,955
Conversion of eight membership units to eight shares of common stock		—		684			—			—			—		(684	)		—
Redemption of 46 shares of common stock		—		(3,577	)		—			—			—		—			(3,577	)
Cancellation of nine shares of common stock		—		(748	)		—			—			—		—			(748	)
Balance, March 31, 2018	$	20	$	1,355,268		$	(144	)	$	(127,183	)	$	20,807	$	96,912		$	1,345,680

		Page
Part I - FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Income and Comprehensive (Loss) Income (Unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity and Mezzanine Equity (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows (Unaudited)	4
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2528
	Cautionary Note Regarding Forward-Looking Statements	2528
	Explanatory Note and Certain Defined Terms	29
	Overview	2529
	Recent Developments – COVID-19 Pandemic	30
	Recent Developments – Internalization	35
	Results of Operations	35
	Liquidity and Capital Resources	3540
	Cash Flows	44
	Impact of Inflation	3945
	Off-Balance Sheet Arrangements	3945
	Contractual Obligations	39
	~~Results of Operations~~	40
	~~Net Income and Non-GAAP Measures (FFO and AFFO)~~	4245
	Critical Accounting Policies	4445
	Impact of Recent Accounting Pronouncements	4446
	Determined Share Value	46
	Distributions and Distribution Reinvestment	47
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4548
Item 4.	Controls and Procedures	4649
Part II - OTHER INFORMATION		4750
Item 1.	Legal Proceedings	4750
Item 1A.	Risk Factors	4750
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4752
Item 3.	Defaults upon Senior Securities	4853
Item 4.	Mine Safety Disclosures	4853
Item 5.	Other Information	4853
Item 6.	Exhibits	5054

	For the three months ended March 31,
	2019			2018
Revenues
Lease revenues	$	68,430		$	55,589

Operating expenses
Depreciation and amortization		24,310			19,202
Asset management fees		5,120			4,143
Property management fees		1,885			1,517
Property and operating expense		4,390			2,619
General and administrative		1,103			1,330
State and franchise tax		443			243
Provision for impairment of investment in rental properties		1,017			—
Total operating expenses		38,268			29,054

Other income (expenses)
Preferred distribution income		—			188
Interest income		1			110
Interest expense		(15,828	)		(11,177	)
Cost of debt extinguishment		(713	)		—
Gain on sale of real estate		1,400			3,339
Net income		15,022			18,995
Net income attributable to non-controlling interests		(1,084	)		(1,422	)
Net income attributable to Broadstone Net Lease, Inc.	$	13,938		$	17,573

Weighted average number of common shares outstanding
Basic		22,335			19,167
Diluted		24,072			20,719
Net earnings per common share
Basic and diluted	$	0.62		$	0.92

Comprehensive income
Net income	$	15,022		$	18,995
Other comprehensive (loss) income
Change in fair value of interest rate swaps		(12,624	)		16,955
Realized gain on interest rate swaps		(81	)		—
Comprehensive income		2,317			35,950
Comprehensive income attributable to non-controlling interests		(167	)		(2,692	)
Comprehensive income attributable to Broadstone Net Lease, Inc.	$	2,150		$	33,258

	For the three months ended March 31,
	2019			2018
Operating activities
Net income	$	15,022		$	18,995
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		23,572			19,380
Provision for impairment on investment in rental properties		1,017			—
Amortization of debt issuance costs charged to interest expense		517			425
Straight-line rent and financing lease adjustments		(5,143	)		(5,141	)
Cost of debt extinguishment		713			—
Gain on sale of real estate		(1,400	)		(3,339	)
Leasing fees paid		(258	)		(785	)
Other non-cash items		92			185
Changes in assets and liabilities:
Tenant and other receivables		(350	)		(272	)
Prepaid expenses and other assets		(442	)		(588	)
Accounts payable and other liabilities		(315	)		2,046
Accrued interest payable		(1,386	)		1,331
Net cash provided by operating activities		31,639			32,237

Investing activities
Acquisition of rental property accounted for using the operating method		(75,080	)		(101,835	)
Capital expenditures and improvements		(256	)		(1,378	)
Proceeds from disposition of rental property, net		10,612			15,738
Increase in tenant and capital reserves		(13	)		(49	)
Change in deposits on investments in rental property		100			—
Net cash used in investing activities		(64,637	)		(87,524	)

Financing activities
Proceeds from issuance of common stock, net		59,869			44,957
Redemptions of common stock		(1,803	)		(3,577	)
Borrowings on unsecured term notes		300,000			—
Principal payments on mortgages, notes payable and unsecured term notes		(306,970	)		(722	)
Borrowings on unsecured revolver		43,800			79,000
Repayments on unsecured revolver		(45,000	)		(35,000	)
Cash distributions paid to stockholders		(14,495	)		(12,256	)
Cash distributions paid to non-controlling interests		(2,330	)		(2,464	)
Debt issuance and extinguishment costs paid		(5,902	)		—
Net cash provided by financing activities		27,169			69,938
Net (decrease) increase in cash and cash equivalents and restricted cash		(5,829	)		14,651
Cash and cash equivalents and restricted cash at beginning of period		18,989			10,099
Cash and cash equivalents and restricted cash at end of period	$	13,160		$	24,750

Reconciliation of cash and cash equivalents and restricted cash
Cash and cash equivalents at beginning of period	$	18,612		$	9,355
Restricted cash at beginning of period		377			744
Cash and cash equivalents and restricted cash at beginning of period	$	18,989		$	10,099

Cash and cash equivalents at end of period	$	11,726		$	13,499
Restricted cash at end of period		1,434			11,251
Cash and cash equivalents and restricted cash at end of period	$	13,160		$	24,750

Percentage of shares owned by	March 31, 2019			December 31, 2018
Corporation		92.9	%		92.7	%
Non-controlling interests		7.1	%		7.3	%
		100.0	%		100.0	%

	March 31, 2019
(in thousands)	Carrying Amount		Allocation of Impairment			Net Carrying Amount
Investment in rental property accounted for using the operating method, net of accumulated depreciation	$	2,536	$	(748	)	$	1,788
Accrued rental income		180		(180	)		—
Intangible lease assets, net		275		(81	)		194
Leasing fees, net		26		(8	)		18
	$	3,017	$	(1,017	)	$	2,000

	March 31,		December 31,
(in thousands)	2020		2019
Escrow funds and other	$	1,504	$	2,311
Undistributed 1031 proceeds		2,057		5,545
	$	3,561	$	7,856

	December 31, 2018
(in thousands)	Total			Level 1		Level 2			Level 3
Interest rate swap, assets	$	17,633		$	—	$	17,633		$	—
Interest rate swap, liabilities		(1,820	)		—		(1,820	)		—
	$	15,813		$	—	$	15,813		$	—

Significant Unobservable Inputs	Weighted Average Assumption Used	Range
Expected IPO date	March 15, 2021	November 2020 through May 2021
Peer stock price volatility	30.0%	22.96% to 43.91%

As originally reported	For the three months ended
(in thousands)	March 31, 2018
Revenues
Rental income from operating leases	$	51,832
Earned income from direct financing leases		966
Operating expenses reimbursed from tenants		2,749
Other income from real estate transactions		42
Total revenues	$	55,589

As revised	For the three months ended
(in thousands)	March 31, 2018
Revenues
Lease revenues	$	55,589

(in thousands)
Issuance of 781 shares of common stock	$	66,376
Issuance of 1,320 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 thousands, except per share amounts)	If the Company has completed an IPO		If the Company has not completed an IPO
Earnout Tranche^(a)	40-Day VWAP of a REIT Share	Applicable Earnout Period	AFFO per Share	Applicable Earnout Period
$10,000	$90.00	The two-year period beginning on the earlier of (i) the IPO closing date or (ii) December 31, 2020.	$5.85	The two-year period consisting of the calendar years ended December 31, 2020 and December 31, 2021.
$15,000	$95.00	The two-year period beginning on the earlier of (i) the IPO closing date or (ii) December 31, 2020.	$5.95	The two-year period consisting of the calendar years ended December 31, 2020 and December 31, 2021.
$25,000	$97.50	The four-year period beginning on the date that is exactly one year after the earnout period begins for the first and second tranches above.	$6.30	The four-year period consisting of the calendar years ended December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024.
$25,000	$100.00	The four-year period beginning on the date that is exactly one year after the earnout period begins for the first and second tranches above.	$6.70	The four-year period consisting of the calendar years ended December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024.

(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 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
			27	$	73,078	^(a)

(in thousands)	For the three months ended March 31, 2019
Land	$	7,149
Land improvements		10,506
Buildings and improvements		49,677
Acquired in-place leases^(b)		6,618
Acquired above-market leases^(c)		2,169
Acquired below-market leases^(d)		(836	)
	$	75,283

(in thousands)
Remainder of 2019	$	176,619
2020		238,968
Remainder of 2020			$	210,383
2021		241,922		284,505
2022		243,994		287,511
2023		245,606		290,357
2024				285,396
Thereafter		2,059,151		2,130,183
	$	3,206,260	$	3,488,335

(in thousands)
Remainder of 2019	$	3,060
2020		4,194
Remainder of 2020			$	3,047
2021		4,283		4,138
2022		4,369		4,220
2023		4,456		4,305
2024				4,385
Thereafter		55,451		48,803
	$	75,813	$	68,898

	For the three months ended			For the three months ended March 31,
(in thousands)	March 31, 2019			2020			2019
Contractual rental amounts billed for operating leases	$	58,419		$	72,828		$	58,419
Straight-line rent adjustments		5,171
Adjustment to recognize contractual operating lease billings on a straight-line basis					1,665			5,171
Percentage rent income					3			—
Adjustment to revenue recognized for uncollectible rental amounts billed		(440	)		(1,033	)		(440	)
Operating lease rental revenues		63,150
Total operating lease rental revenues					73,463			63,150
Earned income from direct financing leases		1,005			987			1,005
Operating expenses billed to tenants		4,275			3,732			4,275
Total lease revenues	$	68,430
Other income from real estate transactions					49			—
Total Lease revenues, net				$	78,231		$	68,430

(in thousands)
Remainder of 2019	$	14,678
2020		19,314
Remainder of 2020			$	17,706
2021		18,903		23,286
2022		18,288		22,738
2023		17,909		22,411
2024				21,644
Thereafter		126,662		135,452
	$	215,754	$	243,237

	Outstanding Balance
(in thousands, except interest rates)	March 31, 2019			December 31, 2018			Interest Rate^(d)	Maturity Date
2015 Unsecured Term Loan ^(a)	$	—		$	300,000		one-month LIBOR + 1.40%	Feb. 2020 ^(f)
2017 Unsecured Revolving Credit and Term Loan Agreement^(a)
Revolver^(b)		139,900			141,100		one-month LIBOR + 1.20%^(e)	Jan. 2022
5.5-Year term loan		265,000			265,000		one-month LIBOR + 1.35%	Jan. 2023
7-Year term loan		190,000			190,000		one-month LIBOR + 1.90%	Jun. 2024
		594,900			596,100
2019 Unsecured Term Loan ^(a)		300,000			—		one-month LIBOR + 1.85%	Feb. 2026
Senior Notes^(a)
Series A		150,000			150,000		4.84%	Apr. 2027
Series B		225,000			225,000		5.09%	Jul. 2028
Series C		100,000			100,000		5.19%	Jul. 2030
		475,000			475,000
Total		1,369,900			1,371,100
Debt issuance costs, net^(c)		(7,905	)		(4,227	)
	$	1,361,995		$	1,366,873

		Origination	Maturity										Origination	Maturity
(in thousands, except interest rates)	(in thousands, except interest rates)	Date	Date	Interest	March 31,			December 31,				(in thousands, except interest rates)	Date	Date	Interest	March 31,			December 31,
Lender	Lender	(Month/Year)	(Month/Year)	Rate	2019			2018				Lender	(Month/Year)	(Month/Year)	Rate	2020			2019
(1)	Wilmington Trust National Association	Jun-18	Aug-25	4.36%	$	20,583		$	20,674		(a) (b) (c) (m)	Wilmington Trust National Association	Apr-19	Feb-28	4.92%	$	48,787		$	49,065		^{(a) (b) (c) (k)}
(2)	PNC Bank	Oct-16	Nov-26	3.62%		18,165			18,260		(b) (c)	Wilmington Trust National Association	Jun-18	Aug-25	4.36%		20,225			20,318		^{(a) (b) (c) (j)}
(3)	Sun Life	Mar-12	Oct-21	5.13%		11,190			11,288		(b) (g)	PNC Bank	Oct-16	Nov-26	3.62%		17,789			17,885		^{(b) (c)}
(4)	Aegon	Apr-12	Oct-23	6.38%		8,323			8,496		(b) (h)	Sun Life	Mar-12	Oct-21	5.13%		10,785			10,888		^{(b) (f)}
(5)	Symetra Financial	Nov-17	Oct-26	3.65%		6,411			6,467		(a) (b) (k) (l)	Aegon	Apr-12	Oct-23	6.38%		7,604			7,788		^{(b) (g)}
(6)	M&T Bank	Oct-17	Aug-21	one - month LIBOR+3%		5,017			5,051		(b) (d) (i) (j)	M&T Bank	Oct-17	Aug-21	one - month LIBOR+3%		4,878			4,913		^{(b) (d) (h) (i)}
(7)	Columbian Mutual Life Insurance Company	Aug-10	Sep-25	7.00%		1,448			1,459		(b) (c) (d)	Note holders	Dec-08	Dec-23	6.25%		750			750		^(d)
(8)	Note holders	Dec-08	Dec-23	6.25%		750			750		(d)	Standard Insurance Co.	Jul-10	Aug-30	6.75%		—			544		^{(b) (c) (d) (e)}
~~(9)~~	Standard Insurance Co.	Jul-10	Aug-30	6.75%		559			563		(b) (c) (d) (f)						110,818			112,151
(10)	Legg Mason Mortgage Capital Corporation	Aug-10	Aug-22	7.06%		—			4,692		(b) (e)
(11)	Standard Insurance Co.	Apr-09	May-34	6.88%		—			1,751		(b) (c)
						72,446			79,451			Debt issuance costs, net					(354	)		(358	)
	Debt issuance costs, net					(442	)		(499	)						$	110,464		$	111,793
					$	72,004		$	78,952

(in thousands)
Remainder of 2019	$	1,706
2020		2,372
Remainder of 2020			$	2,401
2021		17,137		258,006
2022		141,892		416,207
2023		272,368		273,332
2024				192,260
Thereafter		1,006,871		1,001,912
	$	1,442,346	$	2,144,118

													Reclassification from				Total Interest Expense
								Total Interest Expense		Amount of Loss			Accumulated Other				Presented in the
	Amount of (Loss) Gain			Reclassification from Accumulated Other				Presented in the		Recognized in			Comprehensive Loss				Consolidated Statements of
(in thousands)	Recognized in			Comprehensive Income				Consolidated Statements of		Accumulated Other				Amount of			Income and Comprehensive
	Accumulated Other				Amount of			Income and Comprehensive
For the three months ended March 31,	Comprehensive Income			Location	Gain (Loss)			Income		Comprehensive Loss			Location	(Loss) Gain			(Loss) Income
2020										$	(58,062	)	Interest expense	$	(885	)	$	20,991
2019	$	(12,624	)	Interest expense	$	836		$	15,828		(12,624	)	Interest expense		836			15,828
2018		16,955		Interest expense		(913	)		11,177

	For the three months ended March 31,
(in thousands, except number of redemptions)	2019		2018
Number of redemptions requested	13		8		13
Number of shares	21		46		21
Aggregate redemption price	$	1,803	$	3,577	$	1,803

	For the three months ended March 31,				For the three months ended March 31,
(in thousands, except per share)	2019		2018		2020		2019
Basic earnings:
Net earnings attributable to Broadstone Net Lease, Inc.	$	13,938	$	17,573	$	10,816	$	13,938
Diluted earnings:
Net earnings attributable to Broadstone Net Lease, Inc.	$	13,938	$	17,573	$	10,816	$	13,938
Net earnings attributable to non-controlling interests		1,084		1,422		1,032		1,084
	$	15,022	$	18,995	$	11,848	$	15,022

Basic and diluted weighted average shares outstanding:
Weighted average number of common shares outstanding used in basic earnings per share		22,335		19,167		26,527		22,335
Effects of convertible membership units		1,737		1,552		2,526		1,737
Weighted average number of common shares outstanding used in diluted earnings per share		24,072		20,719		29,053		24,072
Basic and diluted net earnings per common share	$	0.62	$	0.92	$	0.41	$	0.62

		For the three months ended March 31,
(in thousands)	Financial Statement Presentation	2020		2019
Operating lease costs
Office leases	General and administrative	$	52	$	—
Ground leases	Property and operating expense		33		35
Variable lease costs
Ground leases	Property and operating expense		18		12
Total lease costs		$	103	$	47

	Rent Relief Request as of April 30, 2020										Portfolio Diversification as of March 31, 2020
Tenant Industry	# Properties		ABR ($000s)		% of Portfolio ABR			% of Property Type ABR			# Properties		ABR ($000s)		% of Portfolio ABR
Restaurants		186	$	34,357		11.8	%		74.1	%		246	$	46,337		15.9	%
Auto Parts & Equipment		25		9,555		3.3	%		94.6	%		31		10,103		3.5	%
Specialized Consumer Services		36		9,077		3.1	%		97.4	%		37		9,318		3.2	%
Healthcare Facilities		29		8,072		2.8	%		17.9	%		96		45,203		15.6	%
Home Furnishings		2		5,185		1.8	%		100.0	%		2		5,185		1.8	%
Home Furnishings Retail		9		3,910		1.3	%		32.1	%		19		12,195		4.2	%
Movies & Entertainment		1		3,125		1.1	%		100.0	%		1		3,125		1.1	%
Personal Products		2		2,899		1.0	%		100.0	%		2		2,899		1.0	%
Air Freight & Logistics		1		2,744		0.9	%		42.9	%		3		6,400		2.2	%
Industrial Machinery		6		2,675		0.9	%		49.1	%		15		5,454		1.9	%
Specialty Stores		1		2,557		0.9	%		41.8	%		15		6,114		2.1	%
Distillers & Vintners		1		2,344		0.8	%		100.0	%		1		2,344		0.8	%
Internet & Direct Marketing Retail		1		2,280		0.8	%		49.9	%		2		4,564		1.6	%
Construction Machinery & Heavy Truck		1		1,972		0.7	%		100.0	%		1		1,972		0.7	%
Food Retail		1		1,860		0.6	%		100.0	%		1		1,860		0.6	%
Footwear		1		1,761		0.6	%		100.0	%		1		1,761		0.6	%
Automotive Retail		6		1,717		0.6	%		87.4	%		8		1,964		0.7	%
Data Processing & Outsourced Services		1		1,580		0.5	%		100.0	%		1		1,580		0.5	%
Marine		1		1,571		0.5	%		100.0	%		1		1,571		0.5	%
Life Sciences Tools & Services		3		1,449		0.5	%		36.5	%		5		3,973		1.4	%
Automobile Manufacturers		1		1,104		0.4	%		100.0	%		1		1,104		0.4	%
Healthcare Services		1		1,058		0.4	%		13.0	%		16		8,143		2.8	%
Food Distributors		1		1,031		0.4	%		8.1	%		7		12,670		4.4	%
Paper Packaging		1		793		0.3	%		20.1	%		3		3,948		1.4	%
Commodity Chemicals		3		783		0.3	%		56.3	%		4		1,392		0.5	%
Miscellaneous		—		—		—			—			117		89,367		30.6	%
Total		321	$	105,459		36.3	%	N/A				636	$	290,546		100.0	%

~~Property Type~~	~~% NTM Rent~~
~~Retail – other~~		~~13.0~~	%
~~Retail – casual dining~~		~~10.2~~	%
~~Retail – quick service restaurants ("QSR")~~		~~10.0~~	%
~~Total Retail~~		~~33.2~~	%
~~Industrial – warehouse/distribution~~		~~13.4~~	%
~~Industrial – manufacturing~~		~~9.7~~	%
~~Industrial – flex~~		~~5.9~~	%
~~Industrial – other~~		~~3.2~~	%
~~Total Industrial~~		~~32.2~~	%
~~Healthcare – clinical~~		~~14.2~~	%
~~Healthcare – surgical~~		~~3.8~~	%
~~Healthcare – other~~		~~3.5~~	%
~~Total Healthcare~~		~~21.5~~	%
~~Office~~		~~9.5~~	%
~~Other~~		~~3.6~~	%
~~Total~~		~~100.0~~	%

~~Industry~~	~~% NTM Rent~~
~~Restaurants~~		~~20.5~~	%
~~Healthcare Facilities~~		~~19.1~~	%
~~Home Furnishing Retail~~		~~5.0~~	%
~~Specialized Consumer Services~~		~~4.4~~	%
~~Auto Parts & Equipment~~		~~4.3~~	%
~~Packaged Foods & Meats~~		~~3.8~~	%
~~Air Freight & Logistics~~		~~3.1~~	%
~~Healthcare Services~~		~~2.8~~	%
~~Industrial Machinery~~		~~2.3~~	%
~~Distributors~~		~~2.0~~	%
~~Industrial Conglomerates~~		~~1.9~~	%
~~Internet & Direct Marketing Retail~~		~~1.8~~	%
~~Multi-line Insurance~~		~~1.7~~	%
~~Life Sciences Tools & Services~~		~~1.7~~	%
~~General Merchandise Stores~~		~~1.6~~	%
~~Top 15 Tenant Industries~~		~~76.0~~	%
~~Other (31 industries)~~		~~24.0~~	%
~~Total~~		~~100.0~~	%

Year	Number of Tenants		Number of Properties		Square Footage		NTM Rent		Percentage of NTM Rent
2019		1		1		11	$	49		<0.1	%
2020		5		5		112		1,373		0.6	%
2021		7		11		99		1,921		0.8	%
2022		5		4		124		3,253		1.4	%
2023		12		13		703		6,900		2.9	%
2024		14		17		1,795		14,734		6.1	%
2025		10		18		271		4,372		1.8	%
2026		18		29		826		12,520		5.2	%
2027		22		33		1,965		19,955		8.3	%
2028		22		35		1,871		21,125		8.8	%
2029		16		62		2,486		18,500		7.7	%
2030 and thereafter		91		413		9,374		135,526		56.4	%
Untenanted properties		—		3		47		—		—
Total		223		644		19,684	$	240,228		100.0	%