Global Net Lease Q1 2025 Earnings Report

Global Net Lease EPS Results

• Actual EPS: $0.29
• Consensus EPS: $0.23
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: N/A

Global Net Lease Revenue Results

• Actual Revenue: $132.42 million
• Expected Revenue: $187.40 million
• Beat/Miss: Missed by -$54.98 million
• YoY Revenue Growth: N/A

Global Net Lease Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 11:00AM ET

Global Net Lease (NYSE:GNL) (NYSE:GNL) is a real estate investment trust (REIT) that owns and manages a diversified portfolio of commercial properties leased primarily under long-term, net lease agreements. Under these arrangements, tenants generally assume responsibility for many property-level expenses, such as maintenance, insurance and taxes.

The company’s portfolio includes office, industrial and retail properties occupied by a range of corporate and commercial tenants. Global Net Lease focuses on properties that generate recurring rental income and typically seeks locations leased to creditworthy tenants under contractual lease terms.

Global Net Lease invests in properties across the United States and Europe. The company was founded in 2011 and became a publicly traded REIT in 2015. In 2023, it completed a merger with The Necessity Retail REIT, expanding and diversifying its portfolio of net-leased commercial real estate.

Global Net Lease Q1 2025 Earnings Call Transcript

Key Takeaways

• GNL completed the first phase of its multi-tenant portfolio sale, monetizing $1.1 billion in unencumbered properties and using net proceeds to pay down $850 million of revolving credit debt, with a second phase of $700 million in encumbered assets due by end-Q2.
• Net debt to adjusted EBITDA fell to 6.7× from 8.4× a year ago, prompting Fitch and S&P to place GNL on credit watch positive as the company pursues an investment grade rating.
• The Board authorized a $300 million share repurchase program and has repurchased 7.9 million shares at $7.50 apiece (~12 percent AFFO yield), aiming to capitalize on undervaluation and boost per-share metrics.
• Core portfolio remained resilient, finishing Q1 at 95 percent occupancy (pro forma 98 percent), with 60 percent of rent from investment grade tenants, a 6.3-year weighted average lease term, and 1.5 percent annual rent escalations.
• GNL reaffirmed full-year 2025 AFFO guidance of $0.90–$0.96 per share and net debt to adjusted EBITDA target of 6.5×–7.1×, reflecting confidence in its deleveraging and disposal initiatives.

Presentation

[Operator]

Ladies and gentlemen, greetings and welcome to Global Net Lease, Inc First Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jordyn Schoenfeld, Senior Vice President of Investor Relations. Please go ahead.

[Jordyn Schoenfeld, SVP of Investor Relations at Global Net Lease]

Thank you. Good morning, everyone, and thank you for joining us for GNL's First Quarter 2025 earnings call. Joining me today on the call is Michael Weil, GNL's Chief Executive Officer, and Chris Masterson, GNL's Chief Financial Officer. The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please review the forward-looking and cautionary statement section at the end of our First Quarter 2025 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. As stated in our SEC filings, GNL disclaims any intent or obligation to update or revise these forward-looking statements except as required by law. Also, during today's call, we will discuss certain non-GAAP financial measures which we believe can be useful in evaluating the company's financial performance.

[Jordyn Schoenfeld, SVP of Investor Relations at Global Net Lease]

Descriptions of those non-GAAP financial measures that we use, such as AFFO and adjusted EBITDA, and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release and supplemental materials. I'll now turn the call over to our Chief Executive Officer, Michael Weil. Mike.

[Michael Weil, CEO at Global Net Lease]

Thanks, Jordyn. Good morning, and thank you all for joining us today. Since completing our merger and internalization in September of 2023, we've made significant strides to elevate GNL across multiple industry benchmarks. On the governance front, we've strengthened oversight by broadening and diversifying our board, enhancing transparency, and putting in place practices that reflect our overall commitment to corporate governance. Operationally and financially, we launched an ambitious and disciplined initiative to materially reduce leverage, driven by our belief that a stronger balance sheet is essential to lowering our cost of capital, positioning the company for sustained growth, and ensuring we have the agility to navigate periods of heightened uncertainty and market volatility. We believe these actions reflect a clear strategic vision and a deep commitment to building a more resilient and well-positioned company. We've been closely monitoring the tariffs that have introduced heightened uncertainty and volatility into the market.

[Michael Weil, CEO at Global Net Lease]

Our strategy has always revolved around building a net lease portfolio anchored by high credit quality tenants that are generally more resilient in uncertain economic environments. We have been successful in this regard with 60% of our portfolio comprised of investment-grade tenants. We believe our leases, with a weighted average lease term of 6.3 years and 1.5% average annual rent increases, tend to be less impacted by macroeconomic events relative to other asset classes. We also have a disciplined hedging strategy that addresses both interest rate and foreign currency volatility in order to mitigate risk and maintain consistent cash flows. Turning to the first quarter of 2025, we achieved a key milestone in GNL's strategic transformation with the signing of a definitive agreement for the sale of our multi-tenant portfolio to RCG Ventures, the first phase of which has now been completed.

[Michael Weil, CEO at Global Net Lease]

This phase included 59 unencumbered properties generating $1.1 billion in gross proceeds and was completed on schedule, reinforcing our ability to deliver on stated objectives within our long-term strategy. Net proceeds were used to materially reduce leverage through a paydown of $850 million on GNL's revolving credit facility, further strengthening our balance sheet and enhancing financial flexibility for future initiatives. We remain on schedule to complete the sale of the 41 encumbered properties by the end of the second quarter of 2025, which is expected to generate another $700 million of gross proceeds. We believe one of the major benefits of this transaction is that it moves us closer to our goal of securing an investment-grade credit rating, a central objective of our strategy to reduce our cost of capital and increase financial stability.

[Michael Weil, CEO at Global Net Lease]

We're encouraged by the growing recognition of our progress from the rating agencies, with both Fitch and S&P placing GNL on credit watch positive. These upgrades reflect the tangible steps we've taken to reduce leverage, enhance liquidity, and improve overall credit quality. We view this as another critical step in reinforcing financial strength and advancing GNL's strategic objectives. We're also making continued progress on a robust pipeline of non-core dispositions beyond the multi-tenant portfolio sale, which will also contribute to our deleveraging and further reduce net debt to adjusted EBITDA. As of May 1st, we have a closed plus disposition pipeline totaling $2.1 billion. Combined with the full multi-tenant portfolio sale and our 2024 dispositions of non-core and vacant properties, we expect total asset sales to reach nearly $3 billion by the end of 2025.

[Michael Weil, CEO at Global Net Lease]

Assuming the successful completion of all pipeline dispositions on the expected terms, of which there can be no assurance, the streamlined portfolio would simplify and strengthen GNL, with notable improvements in key metrics such as investment-grade tenancy, weighted average remaining lease term, and occupancy. Following these sales, GNL would own a high-quality portfolio of net lease properties valued at approximately $5.5 billion, providing meaningful scale and operating efficiency with a sharp pure-play focus before the end of the second quarter of 2025. At the same time, we continue to take other deliberate steps to further strengthen our capital structure and mitigate risk. We've reduced our 2025 debt maturity balance from approximately $715 million at original issuance to $459 million as of the end of the first quarter of 2025.

[Michael Weil, CEO at Global Net Lease]

We intend to pay off the maturing debt in the second quarter of 2025 and warehouse the balance on our revolving credit facility, which now offers significantly greater availability and flexibility following the substantial paydown we recently completed. We believe these actions position GNL to effectively navigate upcoming maturities from a position of strength while maintaining ample liquidity for strategic initiatives. Along with our multi-tenant portfolio sale, we announced that the board approved a $300 million share repurchase program, allowing the company to accretively buy back its outstanding common stock. Through May 2nd, 2025, we've repurchased 7.9 million shares at a weighted average price of $7.50, totaling $59 million of share repurchases. Repurchasing shares at a significant discount to NAV reflects our strategic approach to capitalize on the opportunity presented by our undervalued stock price in an accretive way.

[Michael Weil, CEO at Global Net Lease]

We intend to continue share repurchases, taking advantage of the compelling opportunity to buy back shares at an AFFO yield of approximately 12%. At the same time, we're continuing our disciplined approach to non-core asset sales and overall leverage reduction as we further strengthen our balance sheet. Turning to our portfolio, at the end of the first quarter, we owned over 1,000 properties spanning over 51 million rentable sq ft. The portfolio's occupancy currently stands at 95%, with a weighted average remaining lease term of 6.3 years. Occupancy was temporarily impacted by the vacancy of Contractor Steel, a privately owned and operated full-service steel supplier that occupied nearly 1.4 million sq ft. Despite the sizable footprint, this tenant represented just 1% of total straight-line rent. Contractor Steel encountered financial difficulties and vacated in the first quarter of 2025.

[Michael Weil, CEO at Global Net Lease]

Following their departure and subsequent to Q1 2025, we sold all five vacant properties for a combined $60 million, having proactively marketed the assets early upon learning of their financial distress, which helped minimize vacancy downtime. Including the sale of these properties, our pro forma first quarter of 2025 occupancy would be 98%. We view this as a favorable outcome as it immediately reduced vacancy with minimal impact on the broader portfolio. Geographically, 76% of our straight-line rent is earned in North America and 24% in Europe. Unlike many net lease peers, our exposure to Europe differentiates us by providing diversification across economic cycles and the ability to capitalize on unique market opportunities not typically available in the U.S. The portfolio features a stable tenant base and a high quality of earnings, with an industry-leading 60% of tenants receiving an investment-grade or implied investment-grade rating.

[Michael Weil, CEO at Global Net Lease]

The portfolio features an average annual contractual rental increase of 1.5%, which excludes the impact of 18.7% of the portfolio, with CPI-linked leases that have historically experienced significantly higher rental increases. On the leasing front, we achieved positive leasing spreads encompassing over 826,000 sq ft, with attractive renewal spreads that were 8.2% higher than expiring rents. New leases that were completed in the first quarter of 2025 have a weighted average lease term of five years, while renewals that were completed during this period have a weighted average lease term of 6.6 years. We have some additional updates regarding our portfolio. In April, we received written notice from the General Services Administration revoking its previous intent to exercise termination rights related to its lease at our Class A office building in Franklin, Tennessee.

[Michael Weil, CEO at Global Net Lease]

As a result, the existing lease agreement with the GSA remains in full force and effect, and we look forward to continuing our strong relationship with the GSA for many years to come. In addition, we've taken proactive steps to reduce our exposure to the gas and convenience store sector, an industry undergoing structural shifts in consumer behavior, fuel demand, and evolving transportation trends. As part of this effort, we started to strategically scale back our concentration to certain tenants within the segment. This decision reflects our disciplined approach to portfolio management and our ongoing focus on reallocating capital toward higher growth sectors that better align with our long-term strategic vision. Our continued ability to limit exposure to high-risk geography, asset types, tenants, and industries is a testament to our portfolio's impressive diversification and credit underwriting.

[Michael Weil, CEO at Global Net Lease]

No single tenant accounts for more than 4.3% of total straight-line rent, and our top 10 tenants collectively contribute only 26% of total straight-line rent. We carefully monitor all tenants in our portfolio and their business operations on a regular basis. I encourage everyone to look at the details of each segment of our portfolio, which can be found in our Q1 2025 investor presentation on our website. We're encouraged by the meaningful progress made on the sale of our multi-tenant portfolio, which is a pivotal step in GNL's strategic transformation. We believe this transaction unlocks key levers to support long-term growth while allowing us to sharpen our focus as a pure-play net lease REIT. We also believe the considerable uncertainty in the current market environment makes this a particularly opportune moment to bolster our liquidity position.

[Michael Weil, CEO at Global Net Lease]

With incremental cash on hand and enhanced capacity on our revolving credit facility, we'll remain disciplined and deliberate as we navigate the current market. I'll turn the call over to Chris to walk through the financial results and balance sheet matters in more detail. Chris?

[Christopher Masterson, CFO at Global Net Lease]

Thanks, Mike. Please note that, as always, a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release, which is posted on our website. We also want to emphasize that first quarter 2025 earnings and leverage metrics reflect the full benefit of NOI from the unencumbered assets sold as part of the multi-tenant portfolio sale, consistent with what we anticipated when establishing full-year guidance.

[Christopher Masterson, CFO at Global Net Lease]

For the first quarter of 2025, we recorded revenue of $132.4 million and a net loss attributable to common stockholders of $200.3 million, which we anticipate will significantly improve upon closing the remainder of the multi-tenant portfolio sale. AFFO was $66.2 million, or $0.29 per share. Looking at our balance sheet, the gross outstanding debt balance was $3.9 billion at the end of the first quarter of 2025, down by [audio distortion] from the end of the first quarter of 2024. Our debt is comprised of $1 billion in senior notes, $547 million on the multi-currency revolving credit facility, and $2.3 billion of outstanding gross mortgage debt. As of the end of the first quarter of 2025, 91% of our debt is fixed, reflecting debt tied to fixed rates or debt that is swapped to fixed rates.

[Christopher Masterson, CFO at Global Net Lease]

Our weighted average interest rate stood at 4.4%, and our interest coverage ratio was 2.5 times. At the end of the first quarter of 2025, our net debt to adjusted EBITDA ratio was 6.7 times based on net debt of $3.7 billion. As a reminder, our net debt to adjusted EBITDA was 8.4 times at the end of the first quarter of 2024. As of March 31st, 2025, we have liquidity of approximately $499 million and $1.4 billion of capacity on our revolving credit facility. Additionally, we have approximately 229 million shares of common stock outstanding and approximately 230 million shares outstanding on a weighted average basis for the first quarter of 2025. As of May 2nd, 2025, we repurchased 7.9 million shares at a weighted average price of $7.50 per share under our share repurchase program, resulting in approximately 223 million shares outstanding.

[Christopher Masterson, CFO at Global Net Lease]

As Mike mentioned, given the potential for additional turbulence in the market, we've continued to take proactive steps to strengthen GNL's balance sheet and overall financial position, which we believe is the most prudent action we can take. In addition, we continue to implement our hedging strategy using FX forwards to lock in foreign exchange rates for three to four years out. This approach is designed to mitigate risk and reduce cash flow uncertainty during periods of market volatility. We remain focused on enhancing liquidity and maintaining financial flexibility, leaving us well-positioned to navigate any market conditions. Turning to our outlook for the remainder of 2025, based on progress to date, we are reaffirming our AFFO per share guidance range of $0.90-$0.96 and our net debt to adjusted EBITDA range of 6.5 times-7.1 times. I'll now turn the call back to Mike for some closing remarks.

[Michael Weil, CEO at Global Net Lease]

Thanks, Chris. Looking ahead, we're encouraged by the meaningful progress we've made in executing on our strategic priorities. The first quarter of 2025 was a significant turning point as we took deliberate steps to simplify our portfolio, strengthen our balance sheet, and enhance financial flexibility. We have a clear focus on creating long-term value reflected by the successful execution of the first phase of the multi-tenant portfolio sale, combined with our additional disposition pipeline and proactive debt reduction efforts. We remain on track to close the other two tranches of the multi-tenant portfolio sale in the second quarter of 2025, marking another important milestone in our transformation. With a simplified asset base, reduced leverage, and increased liquidity, we believe GNL is better positioned to operate efficiently and pursue opportunities that align with our strategic vision.

[Michael Weil, CEO at Global Net Lease]

We believe the actions we've taken have significantly improved our ability to navigate today's market environment while setting the stage for durable growth. Disciplined execution and the strategic deployment of capital towards initiatives that enhance long-term value remain at the core of our approach. These are foundational decisions designed not just to improve short-term metrics, but to drive long-term resilience and performance. We're excited about the future and confident in our path forward. We're available to answer any questions you may have after the call. Operator, please open the line for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

[Operator]

You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from the line of John Kim from BMO Capital Markets. Please go ahead.

[Michael Weil, CEO at Global Net Lease]

Good morning, John.

[John Kim, Managing Director at BMO Capital Markets]

Good morning. On the disposition pipeline of $2.1 billion, can you break down the remaining $300 million that's not part of the multi-tenant portfolio sale by either sector or geography?

[Michael Weil, CEO at Global Net Lease]

In our filed materials and pipeline report, we have done that. A lot of that is disposition pipeline that has been underway since the end of 2024 into 2025.

[Michael Weil, CEO at Global Net Lease]

It's more of what you saw in 2024 of what we have identified in the portfolio as non-core, and it's just a continuing part of how we're looking at the further deleveraging.

[John Kim, Managing Director at BMO Capital Markets]

Michael, you alluded to the volatility in the financial markets since the tariffs were introduced. How much do you think that will impact your ability to sell or pricing that you're looking to achieve?

[Michael Weil, CEO at Global Net Lease]

I think we're going to continue to see opportunity to sell the assets in market, typically to either local private buyer or 1031 buyer for the most part. We've also seen opportunities and have taken advantage of certain markets where repositioning of an asset through a developer sale has continued to be strong. We are not seeing a big change from what we experienced in 2024 as it relates to the disposition strategy.

[Michael Weil, CEO at Global Net Lease]

Again, it's, I think, really enhanced by the relationships that we have with the brokers in community. We've never set out to just have one large national brokerage firm handle all dispositions. The relationship with brokers, I'm always grateful for how well they know their markets, how hard they work, and their interests are aligned with ours. We want to sell the property. They want to earn a commission. They do great work for us. On the share repurchases, you mentioned you achieved a 12% AFFO yield. Is that the hurdle rate that you're looking for on future buybacks? We are certainly very pleased with where we've been executing on the buyback. It is very opportunistic for us to be at this level. It's kind of a blessing and a curse, John. There's nothing I'd like more than to be approaching double-digit stock price.

[Michael Weil, CEO at Global Net Lease]

While this work that we're doing is taking hold, and we've talked about the improved liquidity, the lower leverage, the great leasing that we had in the quarter, the continued dispositions, it's very rewarding for us to see the opportunity to buy back shares to the long-term benefit, the accretion. There's no real estate that a company could buy right now that's equal to the value of what we're doing. Not only are we reducing the outstanding share count, as you know, but we're buying shares that we feel are materially undervalued and trading at too big of a discount to NAV. I was very pleased when the board approved our buyback and we were able to announce it. To buy back nearly $60 million of stock this quickly was probably faster than I had anticipated. The opportunity being what it was, we jumped in.

[Michael Weil, CEO at Global Net Lease]

We'll continue to monitor the AFFO accretion, the hurdle, as you put it. We still think there's opportunity here. Again, I'd like nothing more than to see this be the combination of the results of the second quarter, what really gets this stock moving and closes that gap that we see to value. It's a great way to add to what we're doing.

[John Kim, Managing Director at BMO Capital Markets]

Great. Thank you.

[Michael Weil, CEO at Global Net Lease]

Thanks, John.

[Operator]

Thank you. We take the next question from the line of Uppal Rana from KeyBank Capital Markets. Please go ahead.

[Michael Weil, CEO at Global Net Lease]

Hi, Upal.

[Upal Rana, Director and Equity Research Analyst at KeyBanc Capital Markets]

Great. Thanks. Hey, good morning out there. Just on the buyback, I was wondering if you'd share your strategy on the capital allocation and this pecking order where you see buying more shares or paying down more debt or potentially buying assets again in the future?

[Michael Weil, CEO at Global Net Lease]

We would love to have the market come to us in a way that makes buying assets accretive and interesting. However, we are not there right now, and we do not see the market being very interesting as well. What is coming to market, I do not really see as interesting or long-term valuable. We are very focused, as you know, on reduction of leverage and opportunistic buyback of shares. It is something that we talk about internally, look at with the board. As we confirmed in our earlier comments, we are reaffirming guidance. In our 2025 guidance, we gave our leverage metrics of 6.5-7.1 times. They are just the ongoing execution of the business model, which includes dispositions. It includes leasing. Leverage and buyback are not the only two levers that will have a direct impact on our overall net debt to EBITDA. We are mindful.

[Michael Weil, CEO at Global Net Lease]

We're very mindful of leverage because we think the continued lowering of leverage is going to have a meaningful impact on our cost of capital, and it's going to open some doors for the company. We've talked about one of our mid to, we'll call it a midterm goal, is achieving investment-grade rating. We know that that's going to occur through the continued execution of our plan to lower leverage. I'm actually really proud of the work we're doing because we're addressing a number of important things. It's a lot of focus. It's a lot of great execution between the asset management teams and the dispositions, the overall capital desk and how we're handling the stock buyback. Great work. Chris and his team managing the credit facility and just the increased liquidity that the company has at the end of the first quarter is really meaningful.

[Michael Weil, CEO at Global Net Lease]

A lot of really good things to focus on for GNL. I think that we're starting to get some recognition for the direction that we're taking the company. I always like to talk about sticking to your knitting. I feel like we're really sticking to our knitting, and we're not getting distracted, and we're just doing the things that are going to create long-term value. It's funny. In one quarter, it's almost like the announcement of the sale of the multi-tenant portfolio was a huge announcement because of what it does long-term for GNL, simplifying the story. We closed that big first tranche. We're on track to execute in the second quarter the remaining pieces of that transaction. The word transformative gets used too often, I feel.

[Michael Weil, CEO at Global Net Lease]

I think the first half of 2025 has really been transformative for us, and we're looking forward to second quarter results and moving on from here.

[Upal Rana, Director and Equity Research Analyst at KeyBanc Capital Markets]

Okay. Great. That was helpful. Then just on the credit rating upgrade, maybe you can share some of the conversations you've had with some of the credit agencies and potential timing there. Maybe you can share, if you were to get an upgrade, what this potential savings could look like?

[Michael Weil, CEO at Global Net Lease]

Yeah. I'm going to be a little close to the chest on that one because the conversations, of course, are confidential between the agencies and the company. You saw from their announcement that we were credit watch positive, that they are following the company, and they see the value in lowering leverage and what it does for us.

[Michael Weil, CEO at Global Net Lease]

I think from our longer-term view, eventually being able to access what I'll just call investment-grade debt opportunities, you know the value of that for the company. Right now, we've given 2025 guidance. We've got AFFO guidance of $0.90-$0.96 per share. That takes into account how we're thinking of everything, inclusive of debt costs in 2025. I think that that would probably be something that we're more looking at from a guidance standpoint for 2026.

[Upal Rana, Director and Equity Research Analyst at KeyBanc Capital Markets]

Okay. All right. Thank you. Just last one for me. Just on the strategy of the kinds of disposition you're targeting moving forward, with the multi-tenant portfolio, obviously, it's a big announcement. Just given that's mostly out of the way, and you have mentioned in the past, the office portfolio will likely be sort of one-off, what else is there to do in your portfolio to recycle?

[Michael Weil, CEO at Global Net Lease]

We're looking at some of the retail opportunities in the portfolio from a disposition standpoint. As you mentioned, there are opportunities for dispositions in the office as well. We're a large portfolio. After the multi-tenant disposition, we'll be just over 1,000 properties. We can really take a very granular review of the portfolio and kind of look at our long-term goals. I spoke about that last quarter. Obviously, we see continued value in single-tenant industrial and retail for long-term growth. We've got good value and a lot of investment-grade tenants in our office portfolio, but it's not something that I'd like to see grow. We will opportunistically sell at value from that portfolio. As I said earlier, we're pleased to see the level of buyers. We've been able to continue our velocity of dispositions, and it'll help us achieve the goals that we've already stated.

[Upal Rana, Director and Equity Research Analyst at KeyBanc Capital Markets]

Okay. Great. Thank you.

[Michael Weil, CEO at Global Net Lease]

Thanks.

[Operator]

Thank you. The next question comes from the line of Mitch Germain from Citizens JMP. Please go ahead.

[Michael Weil, CEO at Global Net Lease]

Hi, Mitch.

[Mitch Germain, Managing Director for Real Estate Research at Citizens JMP]

Hey. Good morning. Congrats on the quarter.

[Michael Weil, CEO at Global Net Lease]

Thank you.

[Mitch Germain, Managing Director for Real Estate Research at Citizens JMP]

When looking at the—I can just look at the amount. Obviously, I do not have a lot of the details of your disposition pipeline. But if I look at that amount, what was either agreed under contract or closed from last quarter to this quarter, it has been fairly static. Again, some of the assets might have gone in and out. I am curious, though, you have got a pretty big amount of sales planned for, it looks like, this upcoming quarter. What is next? I mean, will you continue to remain aggressive from an asset sale perspective as long as there is something to do with those proceeds?

[Michael Weil, CEO at Global Net Lease]

Mitch, you always ask good questions that have a—it's a tough direct answer to give because there's a balance in how we look at dispositions. Obviously, we want to see dispositions and use of proceeds related to leverage, which we've done and will continue to do. At the same time, it's very important to us to monitor and understand our NOI and earnings side of the business as well. It's not just an absolute open the door, sell it all down because we think what we're doing is intentional and will create the type of value that we're looking for. We think that it will be what closes the gap, the trading gap, to share price to NAV. We also have the benefit, as you know, of the buyback in doing that.

[Michael Weil, CEO at Global Net Lease]

We're regularly evaluating where we are, regularly evaluating leverage, and also what the market opportunity is for disposition. Between calendar year 2024 and calendar year 2025, we'll have sold a pretty material amount of assets at a meaningful price. I believe what we projected for 2025 in our guidance, A, will achieve, and B, will move us to achieve the goals that we've stated.

[Mitch Germain, Managing Director for Real Estate Research at Citizens JMP]

Okay. $3 billion, by the way, is what you're selling, which is pretty impressive.

[Michael Weil, CEO at Global Net Lease]

Yeah. Yeah.

[Mitch Germain, Managing Director for Real Estate Research at Citizens JMP]

How should I think about some of your commentary regarding C-stores? I mean, are some of those properties in your disposition slide in your presentation, or is that something that could be considered going forward as potential sale candidates, as you mentioned, retail in addition to office?

[Michael Weil, CEO at Global Net Lease]

It was one of our larger sectors in the portfolio.

[Michael Weil, CEO at Global Net Lease]

Yes, we did think, as we've looked at different things, the macro view on fuel prices are, well, the refiners are under some pressure. The convenience store with labor rates going up are under pressure. We try to take a longer, earlier view of what is changing. Sometimes it's changing for good. Sometimes it gives us concern. We have been lightening our exposure to gas and convenience, and that I expect you'll see will continue.

[Mitch Germain, Managing Director for Real Estate Research at Citizens JMP]

Gotcha. Last for me, I guess you had that you talked about a situation with a tenant, Contractor Steel, sorry.

[Michael Weil, CEO at Global Net Lease]

Yes.

[Mitch Germain, Managing Director for Real Estate Research at Citizens JMP]

I hate asking about watchlists, but you talked about C-store and trying to get ahead of potential headwinds there.

[Mitch Germain, Managing Director for Real Estate Research at Citizens JMP]

Rather than say what's happening with your watchlist, is there anything that you're looking in your sector that might be a candidate for sale just because looking out how the trends or your view on sector trends are materializing may create an opportunity to get ahead of headwinds? Is that kind of anything that comes to mind other than C-stores?

[Michael Weil, CEO at Global Net Lease]

Yeah. I'm going to be a little bit coy because sometimes as we're looking to dispose of things, that's not the type of commentary we'd like out in the market. Yes, it is absolutely part of the strategic review that Ori and his team do on a regular basis. Sometimes it's easier to talk about it after the sale, and I can explain our logic of how we were looking at a certain sector, etc. First of all, the real estate is really good real estate.

[Michael Weil, CEO at Global Net Lease]

It's well located. Whether it's going to continue its existing tenant and operation or whether because it's located at a main-in-main location somewhere in a market in America where people live and work, there's a lot that can be done with these types of properties. It's always what we've liked about single-tenant net lease. I think the important thing to really focus on is the watchlist is important, but the asset management review that we're constantly doing, we know the opportunities. Sometimes it's because a developer reaches out to us and all of a sudden is very interested in a property. We're able to get out to that market, see what's going on, figure out what the highest and best use is.

[Michael Weil, CEO at Global Net Lease]

Sometimes a great offer isn't great enough, and other times you kind of start to see that, okay, things are long-term a little bit different than when we bought the property five or six years ago. We want to get ahead of it. It all goes hand in hand: great real estate, understanding the financials, understanding the sector, and then making decisions, hopefully, while there's still great value in the property.

[Mitch Germain, Managing Director for Real Estate Research at Citizens JMP]

Thank you.

[Michael Weil, CEO at Global Net Lease]

Thanks, Mitch.

[Operator]

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Michael Gorman from BTIG. Please go ahead.

[Michael Weil, CEO at Global Net Lease]

Hi, Michael.

[Michael Gorman, Managing Director and REIT Analyst at BTIG]

Hi. Good morning. Just a quick one. Sorry if I missed it. Did Contractor Steel pay any rent in the first quarter?

[Michael Gorman, Managing Director and REIT Analyst at BTIG]

They did not.

[Michael Weil, CEO at Global Net Lease]

I'm looking at Ori. Sorry, Michael.

[Christopher Masterson, CFO at Global Net Lease]

They did not.

[Michael Weil, CEO at Global Net Lease]

Thanks, Chris.

[Michael Gorman, Managing Director and REIT Analyst at BTIG]

They did not. Okay. Good. That's helpful. Thank you. I wonder if you could just help us think through, given the number of moving parts, right? You had the solid first quarter. It implies kind of $0.21—the midpoint of the guidance implies kind of like $0.21 a share pro rata over the balance of the year. Given the timing of the sale in the second quarter, I doubt it's going to be pro forma. Can you help us maybe think through in a little bit more detail kind of what the run rate looks like or maybe just what the back half of the year looks like once the second and third tranches of the multi-tenant deal are closed from an AFFO perspective?

[Christopher Masterson, CFO at Global Net Lease]

I guess, Mike, I can just quickly jump in because I think I could probably help.

[Michael Weil, CEO at Global Net Lease]

Yeah. Go ahead.

[Christopher Masterson, CFO at Global Net Lease]

Point something out here. Michael, so if you take a look at the income statement, the way that it's broken out, we had to disclose discontinued operations, which is effectively the entire multi-tenant portfolio and everything that will be sold. The income statement itself already strips out the multi-tenant. In terms of a go-forward, I just do want to bring up again, we disclosed it last quarter, that the G&A is expected on an annualized basis to decrease by about $6.4 million a year due to this multi-tenant sale.

[Michael Gorman, Managing Director and REIT Analyst at BTIG]

Got it. That's helpful. Maybe just last one from a transaction perspective. Obviously, I think it makes a lot of sense strategically and from the capital structure to sell down the vacant assets and use that to reduce the debt load and repurchase shares.

[Michael Gorman, Managing Director and REIT Analyst at BTIG]

I'm just curious kind of between last year and then what's in the pipeline for this year, it's about 140 vacant assets. I'm just curious, Michael, is that basically the preponderance of the vacant assets that are in the portfolio? Is there still a sleeve there that would be potentially a source of future proceeds, or how should we think about that?

[Michael Weil, CEO at Global Net Lease]

Michael, I'm sorry. I was trying to look through some information as you were asking the question. Will you ask me that one more time? Yeah.

[Michael Gorman, Managing Director and REIT Analyst at BTIG]

Sure. Of course. So between last year and kind of what's in the pipeline, it's about 140 vacant assets that are either closed or set to be closed. Is that the bulk of the vacant assets in the portfolio, or are there more potential vacant sales available to you kind of to be able to pay down additional debt?

[Michael Weil, CEO at Global Net Lease]

Got it.

[Michael Weil, CEO at Global Net Lease]

Thank you. No, because as you saw from our release, we're going to be about 98% occupied in the second quarter after the completion of the multi-tenant sale. We see that going up a little bit from there just from leasing, etc. No, there's not a lot of vacancy left in this portfolio. You're really going to get used to seeing us reporting in what's typical for a single-tenant net lease rate.

[Michael Gorman, Managing Director and REIT Analyst at BTIG]

Great. Thanks for the time.

[Michael Weil, CEO at Global Net Lease]

All right. Thank you, Michael.

[Operator]

Thank you. Ladies and gentlemen, as there are no further questions, I will now hand the conference over to Michael Weil for his closing remarks.

[Michael Weil, CEO at Global Net Lease]

Great. Thank you, everybody. We always appreciate you taking the time to catch up with us and to see the progress that GNL is making. As I said a little bit earlier, really proud of this work that we're doing.

[Michael Weil, CEO at Global Net Lease]

We're all very focused and starting to see the benefits of these conclusions. Thanks again. If you have any questions, we look forward to following up. We'll talk to everybody soon. I guess we'll see most of you at Nareit in a couple of weeks. Talk to everybody then. Thank you.

[Operator]

Thank you. Ladies and gentlemen, the conference of Global Net Lease has now concluded. Thank you for your participation. You may now disconnect your lines.

Participants

Executives

• Jordyn Schoenfeld, SVP of Investor Relations
• Michael Weil, CEO
• Christopher Masterson, CFO

Analysts

• Upal Rana, Director and Equity Research Analyst at KeyBanc Capital Markets
• Michael Gorman, Managing Director and REIT Analyst at BTIG
• Mitch Germain, Managing Director for Real Estate Research at Citizens JMP
• John Kim, Managing Director at BMO Capital Markets