Please note that totals may not add due to rounding.
Forward-looking Statements:
This supplemental package of Global Net Lease, Inc. (the “Company”) includes “forward-looking statements.” These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. In addition, words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” expects,” “plans,” “intends,” “would,” or similar expressions indicate a forward-looking statement, although not all forward-looking statements contain these identifying words. Any statements referring to the future value of an investment in the Company, including the adjustments giving effect to The Necessity Retail REIT (“RTL”) merging with and into Osmosis Sub I, LLC, with Osmosis Sub I continuing as the surviving entity and wholly-owned subsidiary of GNL (the “REIT Merger”) and GNL and RTL becoming internally managed (the “Internalization Merger”) as described in this communication, as well as the potential success that the Company may have in executing the REIT Merger and Internalization Merger, are also forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause the Company’s actual results, or the Company’s actual results after making adjustments to give effect to the REIT Merger and the Internalization Merger, to differ materially from those contemplated by such forward-looking statements, including but not limited to: (i) the Company’s ability to complete the proposed REIT Merger and Internalization Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder approvals and satisfaction of other closing conditions to consummate the proposed transaction, (ii) the occurrence of any event, change or other circumstance that could give rise to the termination of the Internalization Merger Agreement and REIT Merger Agreement, each dated as of May 23, 2023 relating to the proposed transactions, (iii) ability of the Company to obtain lender consent to amend its Second Amended and Restated Credit Facility or any other loan agreement of the Company, if at all, or on terms favorable to the Company, (iv) risks related to the potential repeal of the Company’s Shareholder’s Rights Plan; (v) risks related to the decrease in the beneficial ownership requirements of the Company’s applicable classes and series of stock; (vi) risks related to diverting the attention of the Company’s management from ongoing business operations, (vii) failure to realize the expected benefits of the proposed transactions, (viii) significant transaction costs or unknown or inestimable liabilities, (ix) the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay, (x) the risk that RTL’s business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected, (xi) risks related to future opportunities and plans for the Company post-closing, including the uncertainty of expected future financial performance and results of the Company post-closing following completion of the proposed transactions, (xii) the effect of the announcement of the proposed transaction on the ability of the Company and RTL to operate their respective businesses and retain and hire key personnel and to maintain favorable business relationships, (xiii) the effect of any downgrade of the Company’s or RTL’s corporate rating or to any of their respective debt or equity securities including the outstanding notes under the RTL Indenture; (xiv) risks related to the market value of the GNL common stock, par value $0.01 per share (“Common Stock”) to be issued in the proposed transactions; (xv) other risks related to the completion of the proposed transactions, (xvi) the risk that one or more parties to the Internalization Merger Agreement and REIT Merger Agreement may not fulfil its obligations under the respective agreement, as well as the additional risks, uncertainties and other important factors set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February
2
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
23, 2023, and all other filings with the SEC after that date, 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 Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.
Additional Information About the REIT Merger and Internalization Merger and Where to Find It
In connection with the proposed transactions, on July 6, 2023, GNL filed with the SEC a registration statement on Form S-4 (as amended on July 17, 2023), which includes a document that serves as a prospectus of GNL and a joint proxy statement of GNL and RTL (the “Joint Proxy Statement/Prospectus”). Each party also plans to file other relevant documents with the SEC regarding the proposed transactions. The Form S-4 became effective on July 18, 2023. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTIONS. GNL and RTL commenced mailing the definitive joint proxy statement/prospectus to stockholders on or about July 19, 2023. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus and other relevant documents filed by GNL with the SEC at the SEC’s website at www.sec.gov. Copies of the documents filed by GNL with the SEC are available free of charge on GNL’s website at www.globalnetlease.com or by contacting GNL’s Investor Relations at investorrelations@globalnetlease.com.
Participants in the Proxy Solicitation
GNL and its respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transactions. Information about directors and executive officers of GNL is available in the proxy statement for its 2023 Annual Meeting, as incorporated by reference in the Joint Proxy Statement/Prospectus. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC regarding the proposed transactions. Investors should read the joint proxy statement/prospectus carefully before making any voting or investment decisions. Investors may obtain free copies of these documents from GNL as indicated above.
3
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Non-GAAP Financial Measures
This section discusses non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”), Adjusted Funds from Operations (“AFFO”), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Net Operating Income (“NOI”), Cash Net Operating Income (“Cash NOI”), and Constant Currency. While NOI is a property-level measure, AFFO is based on total Company performance and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined herein, does not reflect an adjustment for straight-line rent but AFFO does include this adjustment. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income, is provided below.
Caution on Use of Non-GAAP Measures
FFO, Core FFO, AFFO, Adjusted EBITDA, NOI, Cash NOI, and Constant Currency should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures.
Other REITs may not define FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate Core FFO or AFFO differently than we do. Consequently, our presentation of FFO, Core FFO and AFFO may not be comparable to other similarly-titled measures presented by other REITs.
We consider FFO, Core FFO and AFFO useful indicators of our performance. Because FFO, Core FFO and AFFO calculations exclude such factors as depreciation and amortization of real estate assets and gain or loss from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO, Core FFO and AFFO presentations facilitate comparisons of operating performance between periods and between other REITs in our peer group.
As a result, we believe that the use of FFO, Core FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our operating performance including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO, Core FFO and AFFO are not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Investors are cautioned that FFO, Core FFO and AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, Core FFO, AFFO and NOI attributable to stockholders, as applicable.
Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the United States dollar which would not have occurred if there had been a constant exchange rate. Revenue from tenants on a Constant Currency basis is calculated by applying the average monthly currency rates from prior comparable period to Revenues from tenants from the applicable period. We believe that this measure provides investors with information about revenue results and trends that eliminates currency volatility while increasing the comparability of our underlying results and trends.
Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations
Funds From Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gain and loss from the sale of certain real estate assets, gain and loss from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated
4
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, Core FFO, AFFO and NOI attributable to stockholders, as applicable. Our FFO calculation complies with NAREIT’s definition.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and, when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Core Funds From Operations
In calculating Core FFO, we start with FFO, then we exclude certain non-core items such as merger, transaction and other costs, settlement costs related to our Blackwells/Related Parties litigation, as well as certain other costs that are considered to be non-core, such as debt extinguishment costs, fire loss and other costs related to damages at our properties. The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of our core business plan to generate operational income and cash flows in order to make dividend payments to stockholders. In evaluating investments in real estate, we differentiate the costs to acquire the investment from the subsequent operations of the investment. We also add back non-cash write-offs of deferred financing costs and prepayment penalties incurred with the early extinguishment of debt which are included in net income but are considered financing cash flows when paid in the statement of cash flows. We consider these write-offs and prepayment penalties to be capital transactions and not indicative of operations. By excluding expensed acquisition, transaction and other costs as well as non-core costs, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties.
Adjusted Funds From Operations
In calculating AFFO, we start with Core FFO, then we exclude certain income or expense items from AFFO that we consider more reflective of investing activities, other non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our business plan. These items include early extinguishment of debt and other items excluded in Core FFO as well as unrealized gain and loss, which may not ultimately be realized, such as gain or loss on derivative instruments, gain or loss on foreign currency transactions, and gain or loss on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market leases intangibles, amortization of deferred financing costs, straight-line rent and equity-based compensation from AFFO, we believe we provide useful information regarding income and expense items which have a direct impact on our ongoing operating performance. We also exclude revenue attributable to the reimbursement by third parties of financing costs that we originally incurred because these revenues are not, in our view, related to operating performance. We also include the realized gain or loss on foreign currency exchange contracts for AFFO as such items are part of our ongoing operations and affect our current operating performance.
In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income. All paid and accrued acquisition, transaction and other costs (including prepayment penalties for debt extinguishments) and certain other expenses, including general and administrative expenses incurred for the 2023 proxy contest and related Blackwells/Related Parties litigation, negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will also have negative effects on returns to investors, but are excluded by us as we believe they are not reflective of our on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income. In addition, as discussed above, we view gain and loss from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management’s analysis of our operating performance. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gain or loss, we believe AFFO provides useful supplemental information. By providing AFFO, we believe we are presenting useful information that can be used to, among other things, assess our
5
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
performance without the impact of transactions or other items that are not related to our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently. Furthermore, we believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net income (loss) calculated in accordance with GAAP and presented in our consolidated financial statements. AFFO should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to make distributions.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income, Cash Net Operating Income, and Constant Currency.
We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition, transaction and other costs, other non-cash items and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. We also exclude revenue attributable to the reimbursement by third parties of financing costs that we originally incurred because these revenues are not, in our view, related to operating performance. All paid and accrued acquisition, transaction and other costs (including prepayment penalties for debt extinguishments) and certain other expenses, including general and administrative expenses incurred for the 2023 proxy contest and related Blackwells/Related Parties litigation, negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will also have negative effects on returns to investors, but are not reflective of on-going performance. Due to the increase in general and administrative expenses as a result of the 2023 proxy contest and related litigation as a portion of our total general and administrative expenses in the first quarter of 2023, we began including this adjustment to arrive at Adjusted EBITDA in order to better reflect our operating performance. Adjusted EBITDA for the fourth quarter of 2022 (the only prior period with these types of costs) has been conformed to this presentation. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.
NOI is a non-GAAP financial measure equal to net income (loss), the most directly comparable GAAP financial measure, less discontinued operations, interest, other income and income from preferred equity investments and investment securities, plus corporate general and administrative expense, acquisition, transaction and other costs, depreciation and amortization, other non-cash expenses and interest expense. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets and to make decisions about resource allocations. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition activity on an unlevered basis, providing perspective not immediately apparent from net income. NOI excludes certain components from net income in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity.
Cash NOI is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define Cash NOI as net operating income (which is separately defined herein) excluding amortization of above/below market lease intangibles and straight-line adjustments that are included in GAAP lease revenues. We believe that Cash NOI is a helpful measure that both investors and management can use to evaluate the current financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Cash NOI should not be considered as an alternative to net income, as an indication of our financial performance, or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present Cash NOI may not be directly comparable to the way other REITs calculate and present Cash NOI.
Cash Paid for Interest is calculated based on the interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net. Management believes that Cash Paid for Interest provides useful information to investors to assess our overall solvency and financial flexibility. Cash Paid for Interest should not be considered as an alternative to interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.
Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the United States dollar which would not have occurred if there had been a constant exchange rate. Revenue from tenants
6
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
on a Constant Currency basis is calculated by applying the average monthly currency rates from prior comparable period to Revenues from tenants from the applicable period. We believe that this measure provides investors with information about revenue results and trends that eliminates currency volatility while increasing the comparability of our underlying results and trends.
7
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Key Metrics
As of and for the three months ended June 30, 2023
Amounts in thousands, except per share data, ratios and percentages
Financial Results
Revenue from tenants
$
95,844
Revenue from tenants (quarter-over-quarter constant currency adjusted) [1]
$
96,012
Net loss attributable to common stockholders
$
(31,357)
Basic and diluted net loss per share attributable to common stockholders [2]
$
(0.30)
Cash NOI [1]
$
86,322
Adjusted EBITDA [1]
$
73,389
AFFO attributable to common stockholders [1]
$
41,410
Dividends per share - first quarter [3]
$
0.40
Dividend yield - annualized, based on quarter end share price
15.6
%
Balance Sheet and Capitalization
Equity market capitalization - based on quarter end share price of $10.28 for common shares, $21.08 for Series A preferred shares and $19.03 for Series B preferred shares
$
1,305,993
Net debt [4] [5]
2,441,984
Enterprise value
$
3,747,977
Total capitalization
$
3,848,895
Total consolidated debt [5]
$
2,542,902
Total assets
$
4,001,876
Liquidity [6]
$
374,118
Common shares outstanding as of June 30, 2023 (thousands)
104,406
Common share price, end of quarter
$
10.28
Net debt to enterprise value
65.2
%
Net debt to annualized adjusted EBITDA [7]
8.3
x
Weighted-average interest rate cost [8]
4.8
%
Weighted-average debt maturity (years) [9]
3.7
Interest Coverage Ratio [10]
2.9
x
Real Estate Portfolio
Number of properties
317
Number of tenants
139
Square footage (millions)
39.6
Leased
97.7
%
Weighted-average remaining lease term (years) [11]
7.6
Footnotes:
[1] This Non-GAAP metric is reconciled below.
[2] Adjusted for net income attributable to common stockholders for common share equivalents.
[3] Represents quarterly dividend per share rate based off the annualized dividend rate of $1.60.
[4] Represents total debt outstanding of $2.5 billion, less cash and cash equivalents of $100.9 million.
[5] Excludes the effect of mortgage discounts and deferred financing costs, net.
[6] Liquidity includes $273.2 million of availability under the credit facility and $100.9 million of cash and cash equivalents as of June 30, 2023.
[7] Annualized adjusted EBITDA annualized based on Adjusted EBITDA for the quarter ended June 30, 2023 multiplied by four.
[8] The weighted average interest rate cost is based on the outstanding principal balance of the debt.
[9] The weighted average debt maturity is based on the outstanding principal balance of the debt.
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Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
[10] 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). Adjusted EBITDA and cash paid for interest are Non-GAAP metrics and are reconciled below.
[11] The weighted-average remaining lease term (years) is based on square feet.
9
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023
Consolidated Balance Sheets
Amounts in thousands
June 30, 2023
December 31, 2022
(Unaudited)
ASSETS
Real estate investments, at cost:
Land
$
505,202
$
494,101
Buildings, fixtures and improvements
3,347,831
3,276,656
Construction in progress
37,262
26,717
Acquired intangible lease assets
727,678
689,275
Total real estate investments, at cost
4,617,973
4,486,749
Less accumulated depreciation and amortization
(963,745)
(891,479)
Total real estate investments, net
3,654,228
3,595,270
Cash and cash equivalents
100,918
103,335
Restricted cash
4,268
1,110
Derivative assets, at fair value
27,649
37,279
Unbilled straight-line rent
77,444
73,037
Operating lease right-of-use asset
51,240
49,166
Prepaid expenses and other assets
50,453
64,348
Due from related parties
436
464
Deferred tax assets
2,584
3,647
Goodwill and other intangible assets, net
21,556
21,362
Deferred financing costs, net
11,100
12,808
Total Assets
$
4,001,876
$
3,961,826
LIABILITIES AND EQUITY
Mortgage notes payable, net
$
995,184
$
1,233,081
Revolving credit facility
1,038,502
669,968
Senior notes, net
493,810
493,122
Acquired intangible lease liabilities, net
23,091
24,550
Derivative liabilities, at fair value
1,798
328
Due to related parties
350
1,183
Accounts payable and accrued expenses
31,265
22,889
Operating lease liability
22,329
21,877
Prepaid rent
28,844
28,456
Deferred tax liability
6,395
7,264
Dividends payable
5,139
5,189
Total Liabilities
2,646,707
2,507,907
Commitments and contingencies
—
—
Stockholders’ Equity:
7.25% Series A cumulative redeemable preferred stock
68
68
6.875% Series B cumulative redeemable perpetual preferred stock
47
47
Common stock
2,374
2,371
Additional paid-in capital
2,690,375
2,683,169
Accumulated other comprehensive income
11,593
1,147
Accumulated deficit
(1,368,678)
(1,247,781)
Total Stockholders’ Equity
1,335,779
1,439,021
Non-controlling interest
19,390
14,898
Total Equity
1,355,169
1,453,919
Total Liabilities and Equity
$
4,001,876
$
3,961,826
10
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Consolidated Statements of Operations
Amounts in thousands, except per share data
Three Months Ended
June 30, 2023
March 31, 2023
December 31, 2022
September 30, 2022
Revenue from tenants
$
95,844
$
94,332
$
93,948
$
92,599
Expenses:
Property operating
9,033
8,146
9,854
7,765
Operating fees to related parties
10,110
10,101
9,877
10,088
Impairment charges
—
—
4,504
796
Merger, transaction and other costs
6,279
99
—
103
Settlement costs
15,084
—
—
—
General and administrative
10,683
5,660
6,108
4,060
Equity-based compensation
2,870
2,925
2,855
3,132
Depreciation and amortization
37,297
37,029
36,987
37,791
Total expenses
91,356
63,960
70,185
63,735
Operating income before loss on dispositions of real estate investments
4,488
30,372
23,763
28,864
Gain on dispositions of real estate investments
—
—
120
143
Operating income
4,488
30,372
23,883
29,007
Other income (expense):
Interest expense
(27,710)
(26,965)
(25,731)
(24,207)
Loss on extinguishment of debt
(404)
—
(1,657)
(41)
(Loss) gain on derivative instruments
(774)
(1,656)
(6,892)
13,121
Other income
1,650
66
127
10
Total other expense, net
(27,238)
(28,555)
(34,153)
(11,117)
Net (loss) income before income taxes
(22,750)
1,817
(10,270)
17,890
Income tax expense
(3,508)
(2,707)
(2,370)
(3,052)
Net (loss) income
(26,258)
(890)
(12,640)
14,838
Preferred stock dividends
(5,099)
(5,099)
(5,098)
(5,099)
Net (loss) income attributable to common stockholders
$
(31,357)
$
(5,989)
$
(17,738)
$
9,739
Basic and Diluted (Loss) Earnings Per Share:
Net (loss) income per share attributable to common stockholders — Basic and Diluted
$
(0.30)
$
(0.06)
$
(0.17)
$
0.09
Weighted average shares outstanding — Basic and Diluted
104,149
103,783
103,782
103,715
11
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Non-GAAP Measures
Amounts in thousands, except per share data
Three Months Ended
June 30, 2023
March 31, 2023
December 31, 2022
September 30, 2022
EBITDA:
Net (loss) income
$
(26,258)
$
(890)
$
(12,640)
$
14,838
Depreciation and amortization
37,297
37,029
36,987
37,791
Interest expense
27,710
26,965
25,731
24,207
Income tax expense
3,508
2,707
2,370
3,052
EBITDA
42,257
65,811
52,448
79,888
Impairment charges
—
—
4,504
796
Equity-based compensation
2,870
2,925
2,855
3,132
Merger, transaction and other costs
6,279
99
—
103
Settlement costs
15,084
—
—
—
Gain on dispositions of real estate investments
—
—
(120)
(143)
Loss (gain) on derivative instruments
774
1,656
6,892
(13,121)
Loss on extinguishment of debt
404
—
1,657
41
Other income
(1,650)
(66)
(127)
(10)
Expenses attributable to 2023 proxy contest and related litigation [1]
7,371
1,716
1,436
—
Adjusted EBITDA
73,389
72,141
69,545
70,686
Operating fees to related parties
10,110
10,101
9,877
10,088
General and administrative
10,683
5,660
6,108
4,060
Expenses attributable to 2023 proxy contest and related litigation [1]
(7,371)
(1,716)
(1,436)
—
NOI
86,811
86,186
84,094
84,834
Amortization related to above and below-market lease intangibles and right-of-use assets, net
1,297
955
349
351
Straight-line rent
(1,786)
(1,888)
(2,099)
(2,314)
Cash NOI
$
86,322
$
85,253
$
82,344
$
82,871
Cash Paid for Interest:
Interest Expense
$
27,710
$
26,965
$
25,731
$
24,207
Non-cash portion of interest expense
(2,083)
(2,085)
(2,240)
(2,322)
Amortization of mortgage discounts
(237)
(227)
(225)
(225)
Total cash paid for interest
$
25,390
$
24,653
$
23,266
$
21,660
Footnote:
[1] Amounts relate to general and administrative expenses incurred for the 2023 proxy contest and related Blackwells Capital LLC, an affiliate of Blackwells Onshore, and certain others involved with the proxy solicitation (collectively, the “Blackwells/Related Parties”) litigation. The Company does not consider these expenses to be part of its normal operating performance. Due to the increase in these expenses as a portion of its general and administrative expenses in the quarter ended March 31, 2023, the Company began including this adjustment to arrive at Adjusted EBITDA in order to better reflect its operating performance. Adjusted EBITDA for the quarter ended December 31, 2022 was conformed to this presentation. The quarter ended September 30, 2022 did not have any of these expenses.
12
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Non-GAAP Measures
Amounts in thousands, except per share data
Three Months Ended
June 30, 2023
March 31, 2023
December 31, 2022
September 30, 2022
Funds from operations (FFO):
Net (loss) income attributable to common stockholders (in accordance with GAAP)
$
(31,357)
$
(5,989)
$
(17,738)
$
9,739
Impairment charges
—
—
4,504
796
Depreciation and amortization
37,297
37,029
36,987
37,791
Gain on dispositions of real estate investments
—
—
(120)
(143)
FFO (as defined by NAREIT) attributable to common stockholders
5,940
31,040
23,633
48,183
Merger, transaction and other costs [1]
6,279
99
—
103
Settlement costs [2]
15,084
—
—
—
Loss on extinguishment of debt
404
—
1,657
41
Core FFO attributable to common stockholders
27,707
31,139
25,290
48,327
Non-cash equity-based compensation
2,870
2,925
2,855
3,132
Non-cash portion of interest expense
2,083
2,085
2,240
2,322
Amortization related to above and below-market lease intangibles and right-of-use assets, net
1,297
955
349
351
Straight-line rent
(1,786)
(1,888)
(2,099)
(2,314)
Unrealized income on undesignated foreign currency advances and other hedge ineffectiveness
—
—
—
1
Eliminate unrealized losses (gains) on foreign currency transactions [3]
1,631
2,647
11,897
(10,732)
Amortization of mortgage discounts
237
227
225
225
Expenses attributable to 2023 proxy contest and related litigation [4]
7,371
1,716
1,436
—
Adjusted funds from operations (AFFO) attributable to common stockholders
$
41,410
$
39,806
$
42,193
$
41,312
Weighted average common shares outstanding — Basic and Diluted
104,149
103,783
103,782
103,715
Net (loss) income per share attributable to common shareholders
$
(0.30)
$
(0.06)
$
(0.17)
$
0.09
FFO per diluted common share
$
0.06
$
0.30
$
0.23
$
0.46
Core FFO per diluted common share
$
0.27
$
0.30
$
0.24
$
0.47
AFFO per diluted common share
$
0.40
$
0.38
$
0.41
$
0.40
Dividends declared to common stockholders
$
41,674
$
41,677
$
41,677
$
41,707
Footnotes:
[1] For the three months ended June 30, 2023, these costs primarily consist of advisory, legal and other professional costs that were directly related to the REIT Merger and Internalization Merger. The quarters ended March 31, 2023, December 31, 2022 and September 30, 2022 did not have any of these costs.
[2] In the three months ended June 30, 2023, we recognized these settlement costs which include one-half of the reasonable, documented, out-of-pocket expenses (including legal fees) incurred by the Blackwells/Related Parties in connection with the proxy contest and related litigation as well as expense for Common Stock issued/to be issued to the Blackwells/Related Parties, as required under the cooperation agreement with the Blackwells/Related Parties.
[3] For AFFO purposes, we add back unrealized (gain) loss. For the three months ended June 30, 2023, the loss on derivative instruments was $0.8 million which consisted of unrealized losses of $1.6 million and realized gains of $0.8 million. For the three months ended March 31, 2023, the loss on derivative instruments was $1.7 million which consisted of unrealized losses of $2.6 million and realized gains of $0.9 million. For the three months ended December 31, 2022, the loss on derivative instruments was $6.9 million, which consisted of unrealized losses of $11.9 million and realized gains of $5.0 million. For the three months ended September 30, 2022, the gain on derivative instruments was $13.1 million which consisted of unrealized gains of $10.7 million and realized gains of $2.4 million.
[4] Amounts relate to general and administrative expenses incurred for the Company’s 2023 proxy contest and related Blackwells litigation. The Company does not consider these expenses to be part of its normal operating performance and has, accordingly, increased its AFFO for these amounts.
Revenue from tenants (quarter-over-quarter constant currency adjusted)
$
96,012
Footnote:
Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the United States dollar which would not have occurred if there had been a constant exchange rate. Revenue from tenants on a Constant Currency basis is calculated by applying the average monthly currency rates from the prior comparable period to Revenues from tenants from the applicable period.
14
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Debt Overview
As of June 30, 2023
Year of Maturity
Number of Encumbered Properties [1]
Weighted-Average Debt Maturity (Years) [1]
Weighted-Average Interest Rate [2]
Total Outstanding Balance [3] (In thousands)
Percent
Non-Recourse Debt
2023 (remainder)
—
—
—
%
$
—
2024
11
0.8
3.7
%
339,070
2025
—
—
—
%
—
2026
—
—
—
%
—
2027
10
4.4
4.4
%
162,580
2028
16
5.3
4.8
%
201,250
Thereafter
28
6.1
4.0
%
301,500
Total Non-Recourse Debt
65
3.9
4.1
%
1,004,400
39
%
Recourse Debt
Revolving Credit Facility
3.3
6.1
%
1,038,502
Senior Notes
4.5
3.8
%
500,000
Total Recourse Debt
3.7
5.3
%
1,538,502
61
%
Total Debt
3.7
4.8
%
$
2,542,902
100
%
Total Debt by Currency
Percent
USD
59
%
EUR
22
%
GBP
18
%
CAD
1
%
Total
100
%
Footnotes:
[1] For non-recourse debt, amounts are shown within the year that the loan fully matures.
[2] As of June 30, 2023, the Company’s total combined debt was 72.0% fixed rate or swapped to a fixed rate and 28.0% floating rate.
[3] Excludes the effect of mortgage discounts and deferred financing costs, net. Current balances as of June 30, 2023 are shown in the year the debt matures.
15
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Future Minimum Lease Rents
As of June 30, 2023
Amounts in thousands
Future Minimum Base Rent Payments [1]
2023 (remainder)
$
258,832
2024
333,500
2025
301,477
2026
278,270
2027
250,916
2028
226,629
Thereafter
1,032,052
Total
$
2,681,676
Footnotes:
[1] Base rent assumes exchange rates of £1.00 to $1.27 for GBP, €1.00 to $1.09 for EUR and C$1.00 to $0.75 as of June 30, 2023 for illustrative purposes, as applicable.
16
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Top Ten Tenants
As of June 30, 2023
Amounts in thousands, except percentages
Tenant / Lease Guarantor
Property Type
Tenant Industry
Annualized SL Rent [1]
SL Rent Percent
The McLaren Group
Industrial
Auto Manufacturing
$
19,458
5
%
FedEx
Distribution
Freight
14,173
4
%
Whirlpool
Industrial/Distribution
Consumer Goods
13,215
4
%
Foster Wheeler
Office
Engineering
11,205
3
%
Government Services Administration (GSA)
Office
Government
11,028
3
%
FCA USA
Industrial/Distribution
Auto Manufacturing
10,147
3
%
ING Bank
Office
Financial Services
9,833
3
%
Broadridge Financial Solutions
Industrial
Financial Services
9,332
3
%
Finnair
Industrial
Aerospace
8,795
2
%
Penske
Distribution
Logistics
8,500
2
%
Subtotal
115,686
32
%
Remaining portfolio
247,009
68
%
Total Portfolio
$
362,695
100
%
Footnotes:
[1] SL Rent (Straight-line rent) is on an annualized basis and assumes exchange rates of £1.00 to $1.27 for GBP, €1.00 to $1.09 for EUR and C$1.00 to $0.75 as of June 30, 2023 for illustrative purposes, as applicable.
17
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Diversification by Property Type
As of June 30, 2023
Amounts in thousands, except percentages
Total Portfolio
Unencumbered Portfolio [2]
Property Type
Annualized SL Rent [1]
SL Rent Percent
Square Feet
Sq. ft. Percent
Annualized SL Rent [1]
SL Rent Percent
Square Feet
Sq. ft. Percent
Office
$
145,299
40
%
8,566
22
%
$
84,067
36
%
4,673
17
%
Industrial
129,665
36
%
17,972
45
%
88,276
38
%
14,378
52
%
Distribution
68,664
19
%
11,430
29
%
41,914
18
%
6,907
25
%
Retail
19,067
5
%
1,583
4
%
19,067
8
%
1,583
6
%
Total
$
362,695
100
%
39,551
100
%
$
233,324
100
%
27,541
100
%
Footnotes:
[1] SL Rent (Straight-line rent) is on an annualized basis and assumes exchange rates of £1.00 to $1.27 for GBP, €1.00 to $1.09 for EUR and
C$1.00 to $0.75 as of June 30, 2023 for illustrative purposes, as applicable.
[2] Includes properties on the credit facility borrowing base.
18
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Diversification by Tenant Industry
As of June 30, 2023
Amounts in thousands, except percentages
Total Portfolio
Unencumbered Portfolio [3]
Industry Type
Annualized SL Rent [1]
SL Rent Percent
Square Feet
Sq. ft. Percent
Annualized SL Rent [1]
SL Rent Percent
Square Feet
Sq. ft. Percent
Financial Services
$
45,006
12
%
3,126
8
%
$
28,077
12
%
2,250
8
%
Auto Manufacturing
41,892
12
%
4,237
11
%
17,735
8
%
2,252
8
%
Consumer Goods
20,452
6
%
4,544
11
%
18,867
8
%
3,875
14
%
Healthcare
19,499
5
%
1,000
3
%
7,905
3
%
576
2
%
Technology
17,969
5
%
987
2
%
14,001
6
%
842
3
%
Freight
15,147
4
%
1,494
4
%
6,961
3
%
774
3
%
Aerospace
14,707
4
%
1,314
3
%
2,750
1
%
191
1
%
Government
14,331
4
%
536
1
%
12,918
6
%
503
2
%
Metal Processing
14,324
4
%
2,472
6
%
10,900
5
%
1,852
7
%
Logistics
14,107
4
%
2,269
6
%
4,277
2
%
1,443
5
%
Energy
11,496
3
%
964
2
%
10,229
4
%
817
3
%
Metal Fabrication
11,430
3
%
1,524
4
%
6,660
3
%
812
3
%
Engineering
11,205
3
%
366
1
%
11,205
5
%
366
1
%
Pharmaceuticals
10,809
3
%
476
1
%
1,020
—
%
86
—
%
Automotive Parts Supplier
9,705
3
%
964
2
%
9,705
4
%
964
4
%
Retail Food Distribution
8,059
2
%
1,128
3
%
8,059
3
%
1,128
4
%
Telecommunications
7,993
2
%
599
2
%
975
—
%
65
—
%
Discount Retail
7,458
2
%
1,001
3
%
1,851
1
%
200
1
%
Publishing
6,498
2
%
873
2
%
6,498
3
%
873
3
%
Pharmacy
6,446
2
%
324
1
%
6,446
3
%
324
1
%
Home Furnishings
5,977
2
%
2,456
6
%
5,977
3
%
2,456
9
%
Specialty Retail
5,575
2
%
486
1
%
5,575
2
%
486
2
%
Food Manufacturing
3,979
1
%
598
2
%
3,979
2
%
598
2
%
Building Products
3,802
1
%
604
2
%
3,802
2
%
604
2
%
Other [2]
34,829
9
%
5,209
13
%
26,952
11
%
3,204
12
%
Total
$
362,695
100
%
39,551
100
%
$
233,324
100
%
27,541
100
%
Footnotes:
[1] SL Rent (Straight-line rent) is on an annualized basis and assumes exchange rates of £1.00 to $1.27 for GBP, €1.00 to $1.09 for EUR and
C$1.00 to $0.75 as of June 30, 2023 for illustrative purposes, as applicable.
[2] Other includes 27 industry types as of June 30, 2023.
[3] Includes properties on the credit facility borrowing base.
19
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Diversification by Geography
As of June 30, 2023
Amounts in thousands, except percentages
Total Portfolio
Unencumbered Portfolio [2]
Region
Annualized SL Rent [1]
SL Rent Percent
Square Feet
Sq. ft. Percent
Annualized SL Rent [1]
SL Rent Percent
Square Feet
Sq. ft. Percent
United States
$
215,944
59.5
%
28,001
70.8
%
$
138,608
59.3
%
19,087
69
%
Michigan
51,751
14.3
%
6,263
15.8
%
33,716
14.5
%
4,124
15.0
%
Texas
24,386
6.7
%
1,887
4.8
%
13,845
5.9
%
1,153
4.2
%
Ohio
18,292
5.0
%
4,405
11.1
%
14,937
6.4
%
3,364
12.2
%
California
14,006
3.9
%
1,226
3.1
%
7,699
3.3
%
838
3.0
%
New Jersey
8,327
2.3
%
349
0.9
%
—
—
%
—
—
%
North Carolina
8,311
2.3
%
2,657
6.7
%
7,567
3.2
%
2,628
9.5
%
Tennessee
8,213
2.3
%
1,125
2.8
%
6,480
2.8
%
662
2.4
%
Indiana
7,028
1.9
%
1,556
3.9
%
3,555
1.5
%
700
2.5
%
Missouri
6,790
1.9
%
656
1.7
%
4,820
2.1
%
566
2.1
%
Illinois
6,342
1.8
%
1,138
2.9
%
5,761
2.5
%
1,062
3.9
%
Alabama
5,606
1.6
%
257
0.7
%
320
0.1
%
58
0.2
%
New York
5,391
1.5
%
760
1.9
%
1,747
0.7
%
145
0.5
%
South Carolina
5,193
1.4
%
801
2.0
%
5,193
2.2
%
801
2.9
%
Kentucky
4,228
1.2
%
523
1.3
%
3,314
1.4
%
446
1.6
%
Pennsylvania
4,079
1.1
%
459
1.2
%
1,770
0.8
%
122
0.4
%
Arkansas
2,973
0.8
%
90
0.2
%
2,973
1.3
%
90
0.3
%
Massachusetts
2,822
0.8
%
250
0.6
%
2,822
1.2
%
250
0.9
%
Minnesota
2,793
0.8
%
266
0.7
%
1,286
0.6
%
219
0.8
%
New Hampshire
2,779
0.8
%
339
0.9
%
2,380
1.0
%
256
0.9
%
Connecticut
2,742
0.8
%
305
0.8
%
2,742
1.2
%
305
1.1
%
Colorado
2,694
0.7
%
87
0.2
%
2,694
1.2
%
87
0.3
%
Kansas
2,127
0.6
%
292
0.7
%
1,922
0.8
%
277
1.0
%
Maine
1,969
0.5
%
50
0.1
%
1,969
0.8
%
50
0.2
%
Florida
1,878
0.5
%
179
0.5
%
1,878
0.8
%
179
0.6
%
Mississippi
1,580
0.4
%
314
0.8
%
283
0.1
%
14
—
%
Georgia
1,557
0.4
%
492
1.2
%
—
—
%
—
—
%
Vermont
1,236
0.3
%
213
0.5
%
—
—
%
—
—
%
Nebraska
1,157
0.3
%
101
0.3
%
278
0.1
%
27
0.1
%
Louisiana
1,111
0.3
%
112
0.3
%
434
0.2
%
36
0.1
%
South Dakota
1,110
0.3
%
54
0.1
%
1,110
0.5
%
54
0.2
%
Iowa
1,053
0.3
%
236
0.6
%
1,053
0.5
%
236
0.9
%
West Virginia
980
0.3
%
104
0.3
%
—
—
%
—
—
%
North Dakota
884
0.2
%
47
0.1
%
884
0.4
%
47
0.2
%
Oklahoma
699
0.2
%
79
0.2
%
699
0.3
%
79
0.3
%
Maryland
690
0.2
%
120
0.3
%
690
0.3
%
120
0.4
%
New Mexico
556
0.2
%
46
0.1
%
556
0.2
%
46
0.2
%
Wyoming
498
0.1
%
37
0.1
%
—
—
%
—
—
%
Montana
441
0.1
%
58
0.2
%
—
—
%
—
—
%
Idaho
441
0.1
%
22
0.1
%
—
—
%
—
—
%
Nevada
344
0.1
%
14
—
%
344
0.1
%
14
0.1
%
Delaware
337
0.1
%
10
—
%
337
0.1
%
10
—
%
Utah
315
0.1
%
12
—
%
315
0.1
%
12
—
%
Virginia
235
0.1
%
10
—
%
235
0.1
%
10
—
%
United Kingdom
80,858
22.3
%
5,237
13.2
%
61,401
26.3
%
4,397
16.2
%
Netherlands
16,194
4.5
%
1,007
2.6
%
3,827
1.6
%
364
1.3
%
Finland
14,401
4.0
%
1,457
3.7
%
—
—
%
—
—
%
Germany
10,230
2.8
%
1,584
4.0
%
10,230
4.4
%
1,584
5.8
%
France
7,726
2.1
%
1,398
3.5
%
7,726
3.3
%
1,398
5.1
%
Luxembourg
5,809
1.6
%
156
0.4
%
—
—
%
—
—
%
Channel Islands
5,776
1.6
%
114
0.3
%
5,776
2.5
%
114
0.4
%
Canada
3,133
0.9
%
372
0.9
%
3,133
1.3
%
372
1.4
%
Italy
2,240
0.6
%
196
0.5
%
2,240
1
%
196
0.7
%
Spain
384
0.1
%
29
0.1
%
383
0.2
%
29
0.1
%
Total
$
362,695
100
%
39,551
100
%
$
233,324
100
%
27,541
100
%
Footnotes:
[1] SL Rent (Straight-line rent) is on an annualized basis and assumes exchange rates of £1.00 to $1.27 for GBP, €1.00 to $1.09 for EUR and
C$1.00 to $0.75 as of June 30, 2023 for illustrative purposes, as applicable.
[2] Includes properties on the credit facility borrowing base.
20
Global Net Lease, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)
Lease Expirations
As of June 30, 2023
Year of Expiration
Number of Leases Expiring
Annualized SL Rent [1]
Annualized SL Rent Percent
Leased Rentable Square Feet
Percent of Rentable Square Feet Expiring
(In thousands)
(In thousands)
2023 (Remaining)
5
$
2,876
0.8
%
395
1.0
%
2024
29
35,065
9.7
%
3,183
8.0
%
2025
22
29,664
8.2
%
2,932
7.4
%
2026
17
25,918
7.1
%
1,643
4.2
%
2027
25
21,020
5.8
%
2,133
5.4
%
2028
50
37,875
10.4
%
4,999
12.6
%
2029
25
36,661
10.1
%
4,183
10.6
%
2030
21
27,785
7.7
%
2,130
5.4
%
2031
15
28,029
7.7
%
3,970
10.0
%
2032
32
26,002
7.2
%
2,331
5.9
%
2033
10
17,625
4.9
%
1,570
4.0
%
2034
10
8,421
2.3
%
696
1.8
%
2035
5
7,547
2.1
%
750
1.9
%
2036
10
5,988
1.7
%
745
1.9
%
2037
2
1,203
0.3
%
178
0.4
%
Thereafter (>2037)
31
46,180
12.7
%
6,792
18.2
%
Total
309
$
357,859
100
%
38,630
100
%
[1] Annualized rental income converted from local currency into USD as of June 30, 2023 for the in-place lease in the property on a straight-line basis, which includes tenant concessions such as free rent, as applicable.
