Highlights Complete Disregard for Stockholders by CEO Nelson and Director Weil
Calls for Termination of GNL Management Agreement with AR Global, the Creation of a Special Independent Committee to Evaluate Governance and Other Corporate Governance Initiatives
Announces Intent to Overhaul Governance Practices
NEW YORK, Oct. 25, 2022 (GLOBE NEWSWIRE) -- Blackwells Capital LLC (together with its affiliates “Blackwells”), today announced it has nominated two exceptional candidates for election to the board of directors of Global Net Lease Inc. (NYSE: GNL) (“Global Net Lease,” “GNL” or the “Company”) at the upcoming 2023 Annual Meeting of Shareholders (the “2023 Annual Meeting”) and plans to pursue a number of corporate governance initiatives. Blackwells, together with its affiliates, is one of the largest owners of common stock and equivalents of GNL.
Additionally, Blackwells announced its intent to propose two additional independent directors for the 2024 Annual Meeting of Shareholders (the “2024 Annual Meeting”).
Blackwells’ independent director nominees will pursue, among others, the termination of the Company’s off-market management agreement (the “Management Agreement”) with AR Global Investments, LLC (“AR Global”) replacing it with one that is far more cost effective, is more in-line with market practices, and that stops enriching a select group of related parties tied to the current external manager, AR Global.
Jason Aintabi, Chief Investment Officer of Blackwells, said, “To think that a triple net lease REIT—with 99% cash rent collections, a weighted average lease term of almost 9 years and a 3.5x interest coverage ratio on long-term fixed funding rates that are below present U.S. treasury yields—has performed as abysmally as GNL has performed, is senseless. We believe the board of directors and management have been, for years, complicit in corporate piracy and are solely to blame. Such behavior should not be permitted in any public marketplace.”
Blackwells believes that almost nowhere else in the public markets are stockholders more in need of a reconstituted board of directors that is prepared to reset commercial arrangements, engage with established and credible managers that can work with the Company on market terms, and review any and all alternatives that can maximize value for stockholders.
The Siphoning of Shareholder Money to Nelson, Weil and AR Global Must End
Currently, more than 1 out of every 10 dollars that GNL makes is spent on payments to AR Global. Since 2016, fees of more than $200 million dollars (representing more than 10% of revenues during every reporting period) have been paid to AR Global.1
All the while, GNL’s stockholders have suffered through a 61% decline in share price while the U.S. Diversified REIT Index returned a positive 48%, and the S&P 500 returned a positive 78%.2 GNL trades at almost a 50% discount to Net Asset Value, and Blackwells expects that the gap will not be closed until stockholders vote to put an end to what Blackwells believes is a raiding of GNL’s shareholder coffers.3
AR Global Management Agreement is Off-Market and Must Be Terminated
GNL’s total operating load represented 4.1% of the Company’s total book value for the 2021 fiscal year, producing a sum that would cover the management of a REIT many times larger, let alone a triple net REIT the size of GNL.4 In fact, there is not a single triple net REIT – other than Necessity Retail REIT (RTL), another company managed by AR Global – with fees remotely approaching those that are currently being charged at GNL.5
Blackwells believes that stockholders should no longer bear the cost of the castigating Management Agreement and is firmly committed to supporting nominees that will seek its immediate termination, without any termination fee paid to AR Global. Further, Blackwells plans to pursue all legal remedies available, including potentially seeking personal liability damages against Messrs. Nelson and Weil in the event that the Management Agreement with AR Global is not promptly terminated as indicated above, or in the event that the Board or management engage in any activities that will interfere with the shareholder voter franchise prior to shareholders exercising their rights at the ballot box.
GNL is in Need of Corporate Governance Overhaul
In September, Blackwells communicated its frustrations to the Board in a letter, attached hereto. As indicated in its letter, Blackwells plans to reform GNL as a leader in proper governance standards by pursuing the following agenda:
1) Nominating highly qualified director candidates with the necessary character and fiduciary experience to lead GNL; 2) Proposing the repeal of the existing poison pill and other anti-takeover measures, which are due to expire April 8, 2024; 3) Proposing the repeal of the recently enacted bylaw, which requires the continued representation of certain of GNL’s advisors on the board of directors; 4) Proposing changes to the board of directors, including the declassification of the board of directors and the adoption of a director resignation policy; 5) Proposing that the board of directors designate a strategic review committee, comprised only of independent directors, to conduct a strategic review process to pursue possible extraordinary transactions, including the power to engage a financial advisor to evaluate a potential sale of the Company; and 6) Proposing an amendment to the Company’s bylaws to allow stockholders the ability to amend the bylaws.
Through the course of its campaign, Blackwells will demonstrate that a conflicted group of managers have caused tremendous harm to shareholders and that there is no alternative other than to purge this group and reset corporate governance and proper commercial practices.
Blackwells’ nominees for election to the GNL Board of Directors at the 2023 Annual Meeting are:
About Blackwells Capital
Blackwells Capital was founded in 2016 by Jason Aintabi, its Chief Investment Officer. Since that time, it has made investments in public securities, engaging with management and boards, both publicly and privately, to help unlock value for stakeholders, including stockholders, employees and communities. Blackwells’ investments in real estate have ranged from property development and management to REITs and adjacent real estate activities, including financing, origination, and managing real estate backed securities, including direct mezzanine and equity investments. Throughout their careers, Blackwells’ principals have invested globally on behalf of leading public and private equity firms and have held operating roles and served on the boards of media, energy, technology, insurance and real estate enterprises. For more information, please visit www.blackwellscap.com.
Contact:Gagnier CommunicationsDan Gagnier646-569-5897Blackwells@gagnierfc.com
IMPORTANT ADDITIONAL INFORMATION
Blackwells, Blackwells Onshore I LLC, Related Fund Management, LLC, Jason Aintabi, Richard O’Toole and James L. Lozier (collectively, the “Participants”) intend to file with the SEC a definitive proxy statement and accompanying WHITE proxy card to be used in connection with the solicitation of proxies from the stockholders of Global Net Lease for the 2023 Annual Meeting of Shareholders. All stockholders of the Company are advised to read the definitive proxy statement and other documents related to the solicitation of proxies by the Participants when they become available, as they will contain important information, including additional information related to the Participants. The definitive proxy statement and an accompanying WHITE proxy card will be furnished to some or all of the Company’s stockholders and will be, along with other relevant documents, available at no charge on the SEC’s website at http://www.sec.gov/.
Certain Information Regarding the Participants
In accordance with Rule 14a-12(a)(1)(i) under the Securities Exchange Act of 1934, as amended, the Participants in the proxy solicitation are: Blackwells, Jason Aintabi, Richard O’Toole and James L. Lozier. As of the date hereof, Blackwells beneficially owns 265,000 shares of common stock, $0.01 par value per share of the Company (“Common Stock”). As of the date hereof, Blackwells Onshore I LLC beneficially owns 100 shares of Common Stock, Mr. Aintabi beneficially owns 285,100 shares of Common Stock and Related Fund Management, LLC owns 1,679,232 shares of Common Stock. As of the date hereof, Messrs. Lozier and O’Toole do not own any shares of Common Stock. However, by virtue of the relationship among the Participants and the formation by them of a Section 13(d) group, all the Participants, individually, are deemed to beneficially own the 1,964,332 shares of Common Stock owned by Blackwells.
Disclaimer
This material does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in any state to any person. In addition, the discussions and opinions in this press release are for general information only, and are not intended to provide investment advice. All statements contained in this press release that are not clearly historical in nature or that necessarily depend on future events are “forward-looking statements,” which are not guarantees of future performance or results, and the words “anticipate,” “believe,” “expect,” “potential,” “could,” “opportunity,” “estimate,” and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained in this press release that are not historical facts are based on current expectations, speak only as of the date of this press release and involve risks that may cause the actual results to be materially different. Certain information included in this material is based on data obtained from sources considered to be reliable. No representation is made with respect to the accuracy or completeness of such data, and any analyses provided to assist the recipient of this presentation in evaluating the matters described herein may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, any analyses should also not be viewed as factual and also should not be relied upon as an accurate prediction of future results. All figures are unaudited estimates and subject to revision without notice. Blackwells disclaims any obligation to update the information herein and reserves the right to change any of its opinions expressed herein at any time as it deems appropriate. Past performance is not indicative of future results.
Appendix
September 16, 2022
Via Email and FedExThe Board of Directorsc/o Christopher Masterson, CFO, Treasurer and SecretaryGlobal Net Lease, Inc.650 Fifth Avenue, 30th FloorNew York, New York 10019
Re: An urgent need for corporate change and meeting request
Dear Members of the Board of Directors:
I write on behalf of Blackwells Capital LLC (“Blackwells”), one of the largest shareholders of Global Net Lease, Inc. (NYSE: GNL) (the “Company” or “GNL”), to express concern with several issues at the Company, including conflicts of interests, poor governance, a Board of Directors that lacks any meaningful ownership in the Company and is in need of refreshment, and the Company’s decision to enter into an onerous 20-year external management agreement that Blackwells believes has further exacerbated the Company’s underperformance and led to abysmal financial performance.
Blackwells believes that change is imperative for the future success of the Company and requests a meeting with the Board of Directors to discuss the weaknesses hindering the Company’s performance as well as the potential pathways to creating long-term shareholder value.
The Current Board of Directors Has Presided Over Negative Returns for Stockholders
The Company’s significant underperformance can be seen in the following:
The Current Board of Directors is conflicted and under qualified
GNL’s current Board has exacerbated the underperformance of the Company whilst prioritizing the interests of themselves and their external manager over that of Company by permitting the following:
The Current Board of Directors Continues to Severely Limit Stockholders’ Rights
The Company’s corporate governance demonstrates that the Board of Directors’ focus is on entrenching insiders instead of creating long-term value for the Company’s investors. The troubling anti-investor governance actions include:
Blackwells Believes GNL Has an Opportunity to Improve Its Performance
Blackwells believes weaknesses in the Company’s corporate structure and governance are the sources of the Company’s disappointing returns. Immediate steps required to reverse long-term shareholder value destruction include:
We look forward to speaking with you in more detail about GNL and the potential for management and the Board of Directors to create lasting value for the benefit of all stockholders.
* * * * *
Sincerely,
Jason Aintabi
1 Source: Operating Fees to Related Parties from GNL Company SEC filings.2 Source: Bloomberg. Note: Share price returns calculated from IPO, June 2, 2015, through October 21, 2022.3 Source: J.P. Morgan North American Equity Research Weekly U.S. Real Estate Stock Tools - October 24, 2022.4 Source: GNL Company SEC filings. Note: Operating load includes $39.1 million asset and property management fees, $17.3 million general and administrative expenses, and $11.0 million of equity-based compensation expenses.5 Source: Public filings of nineteen triple-net peers (ADC, PINE, BNL, EPR, EPRT, FCPT, GLPI, GTY, NNN, RTL, NTST, PSTL, O, SAFE, SRC, STOR, VICI, and WPC)6 Note share price returns calculated as of September 9, 20227 Source: J.P. Morgan North American Equity Research Weekly U.S. Real Estate Stock Tools - September 12, 20228 Source: J.P. Morgan North American Equity Research Weekly U.S. Real Estate Stock Tools - September 12, 20229 Source: Company Filings and Bloomberg.10 Source: Company SEC Filings.
Source: Blackwells Capital LLC