Global Net Lease Reports Third Quarter 2024 Results
- Closed Plus Disposition Pipeline Totaled $950 Million at a Cash Cap Rate of 7.1%- Achieved $85 Million in Cost Synergies, Significantly Exceeding Initial Projection of $75 Million- Reduced Net Debt by $445 Million Year-to-Date; Net Debt to Adjusted EBITDA Improves to 8.0x- $371 Million Disposition Pipeline Will Further Reduce Outstanding Debt- Increased Portfolio Occupancy from 94% to 96% Quarter-Over-Quarter- GNL Reaffirms its Full-Year 2024 Guidance
NEW YORK, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Global Net Lease, Inc. (NYSE:GNL) ("GNL" or the "Company"), an internally managed real estate investment trust that focuses on acquiring and managing a globally diversified portfolio of strategically located commercial real estate properties, announced today its financial and operating results for the quarter ended September 30, 2024.
Third Quarter 2024 Highlights
Revenue was $196.6 million compared to $203.3 million in second quarter 2024, primarily as a result of asset dispositions during the third quarter
Net loss attributable to common stockholders was $76.6 million, compared to net loss of $46.6 million in second quarter 2024
Core Funds from Operations ("Core FFO") was $53.9 million compared to $50.9 million in second quarter 2024
Adjusted Funds from Operations ("AFFO") was $73.9 million, or $0.32 per share, compared to $76.7 million in second quarter 2024, or $0.33 per share
Closed plus disposition pipeline totaled $950.2 million2 at a cash cap rate of 7.1% on occupied assets and a weighted average remaining lease term of 5.1 years; includes $187.5 million of vacant closed plus pipeline dispositions that are expected to reduce annualized operating expenses by over $3 million per year
Closed $568.7 million of dispositions through third quarter 2024; plan to use the net proceeds from $371.4 million disposition pipeline to further reduce leverage, keeping us on track with our guidance
Reduced net debt by $445 million so far this year, improving Net Debt to Adjusted EBITDA from 8.4x to 8.0x
Addressed 100% of the outstanding debt that was set to mature in 2024; no debt maturities through third quarter 2025
Recognized $85 million in cost synergies, significantly surpassing the anticipated $75 million projected at the close of the Merger, underscoring the effectiveness of GNL's integration efforts and highlighting its strong execution capabilities
Leased 1.2 million square feet across the portfolio, resulting in nearly $16 million of new straight-line rent
Renewal leasing spread of 4.2% with a weighted average lease term of 5.2 years; new leases completed in the quarter had a weighted average lease term of 6.5 years
Weighted average annual rent increase of 1.3% provides organic rental growth, excluding 15.3% of the portfolio with CPI-linked leases that have historically experienced significantly higher rental increase
Sector-leading 61% of annualized straight-line rent comes from investment-grade or implied investment-grade tenants3
"The third quarter was another successful period for GNL that showcased our steady progress toward achieving key financial objectives established at the beginning of the year," stated Michael Weil, CEO of GNL. "We significantly exceeded our stated $75 million cost synergy target by reaching a total of $85 million of annual, recurring savings, and further reduced net debt by $162 million, totaling $445 million through the third quarter. Our leasing momentum remained strong, with occupancy rising from 94% to 96%, and proactively managed near-term debt maturities with no debt maturities until the third quarter of 2025. We believe we are well-positioned to reach the upper end of our disposition target of $800 million, with closed plus disposition pipeline totaling $950 million at a cash cap rate of 7.1% on occupied assets. We are particularly pleased with our recent occupied office sales, which reduced our exposure to this sector and were sold at a 7.7% cash cap rate. This highlights our ability to reduce our exposure to non-core office at attractive cap rates, underscoring our commitment to enhancing our overall portfolio. The 7.1% cash cap rate we are achieving on the announced disposition of occupied assets represents a significant premium compared to the implied value of this portfolio based on the current trading price. We are excited to build on this positive momentum and finish the year on a strong note."
Full Year 2024 Guidance Update4
GNL reaffirms its disposition guidance range of $650 million to $800 million in total proceeds in 2024.
GNL reaffirms its 2024 AFFO per share guidance range of $1.30 to $1.40 and a net debt to Adjusted EBITDA range of 7.4x to 7.8x.
Summary of Results
Three Months Ended September 30,
Three Months Ended June 30,
(In thousands, except per share data)
2024
2024
Revenue from tenants
$
196,564
$
203,286
Net loss attributable to common stockholders
$
(76,571
)
$
(46,600
)
Net loss per diluted common share
$
(0.33
)
$
(0.20
)
NAREIT defined FFO attributable to common stockholders
$
51,722
$
36,196
NAREIT defined FFO per diluted common share
$
0.22
$
0.16
Core FFO attributable to common stockholders
$
53,940
$
50,855
Core FFO per diluted common share
$
0.23
$
0.22
AFFO attributable to common stockholders
$
73,856
$
76,692
AFFO per diluted common share
$
0.32
$
0.33
Property Portfolio
As of September 30, 2024, the Company's portfolio of 1,223 net lease properties is located in ten countries and territories, and is comprised of 61.9 million rentable square feet. The Company operates in four reportable segments, consistent with its current management internal financial reporting purposes: (1) Industrial & Distribution, (2) Multi-Tenant Retail, (3) Single-Tenant Retail and (4) Office. The real estate portfolio metrics include:
96% leased with a remaining weighted-average lease term of 6.3 years5
80% of the portfolio contains contractual rent increases based on annualized straight-line rent
61% of portfolio annualized straight-line rent derived from investment grade and implied investment grade rated tenants
80% U.S. and Canada, 20% Europe (based on annualized straight-line rent)
33% Industrial & Distribution, 27% Multi-Tenant Retail, 22% Single-Tenant Retail and 18% Office (based on an annualized straight-line rent)
Capital Structure and Liquidity Resources6
As of September 30, 2024, the Company had liquidity of $252.7 million and $366.0 million of capacity under its revolving credit facility. The Company had net debt of $4.8 billion7, including $2.4 billion of mortgage debt. The Company successfully reduced its outstanding net debt balance by $162 million from second quarter 2024.
As of September 30, 2024, the percentage of debt that is fixed rate (including variable rate debt fixed with swaps) was 91% compared to 90% as of June 30, 2024. The Company's total combined debt had a weighted average interest rate of 4.8% resulting in an interest coverage ratio of 2.5 times8. Weighted-average debt maturity was 3.2 years as of September 30, 2024.
Footnotes/Definitions
1 While we consider AFFO a useful indicator of our performance, we do not consider AFFO as an alternative to net income (loss) or as a measure of liquidity. Furthermore, other REITs may define AFFO differently than we do. Projected AFFO per share data included in this release is for informational purposes only and should not be relied upon as indicative of future dividends or as a measure of future liquidity. AFFO for the fourth quarter also contains a number of adjustments for items that the Company believes were non-recurring, one-time items including adjustments for items that were settled in cash such as merger and proxy related expenses.
2 Closed plus disposition pipeline of $950.2 million as of November 1, 2024. Includes $762.7 million of closed plus pipeline occupied dispositions at a cash cap rate of 7.1% and $187.5 million of vacant closed plus pipeline dispositions that is expected to reduce annualized operating expenses by over $3 million. The properties included in our disposition pipeline for such purposes include those for which we have entered into purchase and sale agreements ("PSAs") or non-binding letters of intents ("LOIs"). There can be no assurance that the transactions contemplated by such PSAs or LOIs will be completed on the terms contemplated, if at all.
3 As used herein, "Investment Grade Rating" includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied Investment Grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant's obligation under the lease) or by using a proprietary Moody's analytical tool, which generates an implied rating by measuring a company's probability of default. The term "parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant or a guarantor. Ratings information is as of September 30, 2024. Comprised of 31.8% leased to tenants with an actual investment grade rating and 28.7% leased to tenants with an Implied Investment Grade rating based on annualized cash rent as of September 30, 2024.
4 We do not provide guidance on net income. We only provide guidance on AFFO per share and our Net Debt to Adjusted EBITDA ratio and do not provide reconciliations of this forward-looking non-GAAP guidance to net income per share or our debt to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliations as a result of their unknown effect, timing and potential significance. Examples of such items include impairment of assets, gains and losses from sales of assets, and depreciation and amortization from new acquisitions and other non-recurring expenses.
5 Weighted-average remaining lease term in years is based on square feet as of September 30, 2024.
6 During the three months ended September 30, 2024, the Company did not sell any shares of Common Stock or Series B Preferred Stock through its Common Stock or Series B Preferred Stock "at-the-market" programs.
7 Comprised of the principal amount of GNL's outstanding debt totaling $5.0 billion less cash and cash equivalents totaling $127.2 million, as of September 30, 2024.
8 The interest coverage ratio is calculated by dividing adjusted EBITDA for the applicable quarter by cash paid for interest (calculated based on the interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net). Management believes that Interest Coverage Ratio is a useful supplemental measure of our ability to service our debt obligations. Adjusted EBITDA and Cash Paid for Interest are Non-GAAP metrics and are reconciled below.
Conference Call
GNL will host a webcast and conference call on November 6, 2024 at 11:00 a.m. ET to discuss its financial and operating results. To listen to the live call, please go to GNL's "Investor Relations" section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software.
Dial-in instructions for the conference call and the replay are outlined below.
Conference Call Details
Live CallDial-In (Toll Free): 1-877-407-0792International Dial-In: 1-201-689-8263
Conference Replay*For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the GNL website at www.globalnetlease.com
Or dial in below:Domestic Dial-In (Toll Free): 1-844-512-2921International Dial-In: 1-412-317-6671Conference Number: 13746750*Available from 2:00 p.m. ET on November 7, 2024 through February 7, 2025.
Supplemental Schedules
The Company will furnish supplemental information packages with the Securities and Exchange Commission (the "SEC") to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the "Presentations" tab in the Investor Relations section of GNL's website at www.globalnetlease.com and on the SEC website at www.sec.gov.
About Global Net Lease, Inc.
Global Net Lease, Inc. is a publicly traded real estate investment trust listed on the NYSE, which focuses on acquiring and managing a global portfolio of income producing net lease assets across the United States, and Western and Northern Europe. Additional information about GNL can be found on its website at www.globalnetlease.com.
Forward-Looking Statements
The statements in this press release that are not historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause the outcome to be materially different. The words such as "may," "will," "seeks," "anticipates," "believes," "expects," "estimates," "projects," "potential," "predicts," "plans," "intends," "would," "could," "should" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside of the Company's control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include the risks associated with realization of the anticipated benefits of the merger with The Necessity Retail REIT, Inc. and the internalization of the Company's property management and advisory functions; that any potential future acquisition or disposition by the Company is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause the Company's actual results to differ materially from those presented in the Company's forward-looking statements are set forth in the Risk Factors and "Quantitative and Qualitative Disclosures about Market Risk" sections in the Company's Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and all of its other filings with the U.S. Securities and Exchange Commission, as such risks, uncertainties and other important factors may be updated from time to time in the Company's subsequent reports. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
Contacts:
Investors and Media:Email: (332) 265-2020
Global Net Lease, Inc.Consolidated Balance Sheets(In thousands)
September 30,2024
December 31,2023
ASSETS
(Unaudited)
Real estate investments, at cost:
Land
$
1,268,106
$
1,430,607
Buildings, fixtures and improvements
5,505,148
5,842,314
Construction in progress
5,504
23,242
Acquired intangible lease assets
1,128,991
1,359,981
Total real estate investments, at cost
7,907,749
8,656,144
Less accumulated depreciation and amortization
(1,138,714
)
(1,083,824
)
Total real estate investments, net
6,769,035
7,572,320
Assets held for sale
9,391
3,188
Cash and cash equivalents
127,249
121,566
Restricted cash
53,526
40,833
Derivative assets, at fair value
1,114
10,615
Unbilled straight-line rent
98,914
84,254
Operating lease right-of-use asset
78,278
77,008
Prepaid expenses and other assets
130,077
121,997
Deferred tax assets
4,822
4,808
Goodwill
52,255
46,976
Deferred financing costs, net
11,209
15,412
Total Assets
$
7,335,870
$
8,098,977
LIABILITIES AND EQUITY
Mortgage notes payable, net
$
2,273,464
$
2,517,868
Revolving credit facility
1,583,936
1,744,182
Senior notes, net
900,905
886,045
Acquired intangible lease liabilities, net
80,125
95,810
Derivative liabilities, at fair value
18,656
5,145
Accounts payable and accrued expenses
90,653
99,014
Operating lease liability
50,126
48,369
Prepaid rent
44,821
46,213
Deferred tax liability
6,152
6,009
Dividends payable
11,830
11,173
Total Liabilities
5,060,668
5,459,828