Global Net Lease, Inc 8-K, filed Nov 4, 2021
Global Net Lease, Inc. (GNL)
About this 8-K
Global Net Lease, Inc filed this 8-K on November 4, 2021.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact Name of Registrant as Specified in Charter)
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
(Address, including zip code, of Principal Executive Offices)
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including area code: (
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 7.01. | Regulation FD Disclosure. |
Earnings Call Script
On November 4, 2021, Global Net Lease, Inc. (the “Company”) hosted a conference call to discuss its financial and operating results for the quarter ended September 30, 2021. A transcript of the pre-recorded portion of the conference call is furnished as Exhibit 99.1 to this Current Report on Form 8-K. As previously disclosed, a replay of the entire conference call is available through February 4, 2022 by telephone as follows:
Domestic Dial-In (Toll Free): 1-844-512-2921
International Dial-In: 1-412-317-6671
Conference Number: 13724123
The information set forth in Item 7.01 of this Current Report on Form 8-K and in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing.
The statements in this Current Report on Form 8-K that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause the outcome to be materially different. In addition, words such as “anticipates,” “believes,” “expects,” “estimates,” “projects,” “plans,” “intends,” “may,” “would” 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 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 potential adverse effects of the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, on the Company, the Company’s tenants and the global economy and financial markets and that the information about rent collections may not be indicative of any future period, as well as those set forth in the Risk Factors section of the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2020 filed on February 26, 2021, 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 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.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit No | Description | |
| 99.1 | Transcript | |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GLOBAL NET LEASE, INC. | ||
| Date: November 4, 2021 | By: | /s/ James L. Nelson |
| Name: | James L. Nelson | |
| Title: | Chief Executive Officer and President | |
Exhibit 99.1
Global Net Lease, Inc. (NYSE:GNL) Q3 Earnings Conference Call
Operator
Good afternoon and welcome to the Global Net Lease Third Quarter 2021 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to Louisa Quarto, Executive Vice President. Please go ahead.
Louisa Quarto
Thank you, operator. Good afternoon everyone and thank you for joining us for GNL's Third Quarter 2021 Earnings Call. This call is being webcast in the Investor Relations section of GNL's website at www.globalnetlease.com. Joining me today on the call to discuss the quarter’s results are Jim Nelson, GNL’s Chief Executive Officer and Chris Masterson, GNL’s Chief Financial Officer.
The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings including the Form 10-K for the year ended December 31, 2020 filed on February 26, 2021 and all other filings with the SEC after that date for a more detailed discussion of the risk factors that could cause these differences.
Any forward-looking statements provided during this conference call are only made as of the date of this call. 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 non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release and supplement which are posted to our website at www.globalnetlease.com. Please also refer to our earnings release for more detailed information about what we consider to be implied investment grade tenants, a term we will use throughout today's call.
I will now turn the call over to our CEO, Jim Nelson. Jim?
James Nelson
Thank you, Louisa, and thanks to everyone for joining us on today’s call. I am pleased to report that GNL had a very strong quarter, steadily making progress on our long-term objectives. Our high-quality mission-critical net lease portfolio is performing as we expect, with occupancy of over 99.1% and nearly 100% rent collection. We are advancing our differentiated international portfolio strategy by continuing to close on accretive acquisitions, increasing portfolio concentration in industrial and distribution assets and successfully extending and expanding leases. We continue to drive growth as year-over-year Cash NOI for the third quarter increased by more than 18% to $87.4 million. Our acquisition pipeline remains robust. Through October 31st, we have closed on over $380 million of acquisitions in 2021 at a weighted-average cap rate of 9.74% and a weighted average remaining lease term of almost 17 years. With the acquisitions we have in our pipeline we are on pace to complete over $450 million of acquisitions for the year. Along with our embedded rent growth, we are well positioned to drive earnings and cash flow growth going forward. We continue to strengthen our balance sheet. Quarter over quarter, annualized Net Debt to Adjusted EBITDA improved to 7.4x from 7.8x and AFFO per share remained consistent at $0.44. Dividends paid to common stockholders were $0.40 per share. Our unique global capabilities, strong balance sheet and best in class portfolio continue to drive GNL's excellent performance.
One of the reasons we remain confident in our strategy is our ability to source and close great acquisitions on attractive terms. I want to take a few moments to provide some additional color on some of the recent transactions we have closed, including the acquisitions of Trafalgar Court, during the third quarter, and Wal-Mart and Pilot Point Steel early in the fourth quarter.
The Trafalgar Court property in Guernsey was acquired at a contract purchase price of $76.5 million based on the exchange rate on the day of closing. When we agreed to acquire this property, with a strong tenant base that is nearly 100% implied investment grade rated, we negotiated an attractive 8.05% going-in cap rate due to a near-term lease expiration for a significant tenant. Prior to closing, we leveraged our strong asset-management platform to secure a 15-year lease extension for the expiring tenant, representing 25% of the building's space, extending the weighted-average remaining lease term for the property to 9.6 years from 5.8 years. We believe this extended lease, as well as preliminary lease extension discussions with the property's other major tenant, give us the opportunity to unlock millions of dollars of value from the property.
We were invited to bid on Trafalgar Court because of our reputation in the UK and across Europe for our ability to come to terms and close on significant industrial and office acquisitions. We have continually demonstrated that our team is unmatched when it comes to developing deal structure, closing on time and leveraging our expertise and relationships in local markets to appropriately finance our acquisitions. Notable recent European acquisitions of Whirlpool, where we acquired a portfolio of properties in the US and Italy, and then continuing through the Johnson Controls and McLaren acquisitions, we have shown sale-leaseback candidates time and again that GNL is the partner of choice.
Early in the fourth quarter, we closed on the acquisition of the Walmart Learning Center in Bentonville, Arkansas which serves as the primary digital and onsite training and development facility for Walmart associates world-wide. The new-construction training center we acquired is part of the company's new headquarters campus. Walmart has built out the learning center with cutting edge audio and visual capabilities. Needless to say, we are very pleased to add Walmart, the number one company on the Fortune 500 list, to our tenant roster and are happy to play a role in their ongoing investments into their digital transformation.
Our forward acquisitions pipeline includes eight industrial properties in the US and the Netherlands for over $70 million. Combined with the acquisitions we have closed year to date, we anticipate total 2021 acquisitions activity to exceed $450 million at a weighted-average cap rate of almost 9% and with over 16 years of lease term remaining. Our team is also evaluating strategic disposition opportunities and searching for additional acquisition targets that meet our stringent investment requirements.
Lease extensions remain a focus for our asset management team. Year to date, we have completed nine lease extensions and one tenant expansion project and executed one new LOI. Leasing activity for the year, assuming the LOI leads to a definitive agreement, totals 1.5 million square feet and $15.7 million of annualized base rent. On average, the lease extensions have added almost five years of lease term and represent 4.0% of GNL's total portfolio. I am very pleased with the stability of our portfolio and the way we have been able to reduce our exposure to potential lease expirations thanks to the mission-critical nature of many of our properties and our strong acquisitions underwriting. The vast majority of our leases don't expire until after the end of 2025.
Our $4.6 billion, 312 property portfolio is nearly fully occupied at 99.1% leased with a weighted average remaining lease term of 8.2 years at the end of the quarter. Geographically, 239 of our properties are in the U.S. and Canada and 73 are in the U.K. and Western Europe, representing 60% and 40% of annualized straight-line rent revenue, respectively. Our portfolio is well-diversified with 134 tenants in 48 industries, with no single industry representing more than 13% of the whole portfolio, based on annual straight-line rent.
We also continue to increase the concentration of industrial properties in our portfolio. At the end of the third quarter, our assets were 52% industrial and distribution, 43% office, and 5% retail, compared to 47% industrial and distribution, 48% office, and 5% retail a year ago. Contributing to our success is our focus on tenant credit, industrial acquisitions and retail dispositions over the last several years. Across the portfolio, over 55% of annual straight-line rent comes from Investment Grade or implied Investment Grade tenants.
GNL is well positioned for a strong full-year 2021 as we close on our pipeline of high-quality acquisitions and continue to see the benefit of the significant acquisitions we've made year to date.
With that, I'll turn the call over to Chris to walk through the financial results in more detail before I follow up with some closing remarks. Chris?
Chris Masterson
Thanks, Jim.
For the third quarter 2021 we recorded adjusted EBITDA of $75.2 million, up from $63.6 million in the third quarter of 2020. We also reported a 15.8% increase in revenue to $95.8 million, inclusive of a $2.2 million lease termination fee, up from $82.7 million, with net income attributable to common stockholders of $2.4 million. FFO and AFFO for the third quarter were $44.0 million and $44.3 million, respectively, or $0.43 and $0.44 per share, compared to $0.39 and $0.46 per share in the third quarter of 2020. As always, a reconciliation of GAAP net income to the non-GAAP measures can be found in our earnings release.
On the balance sheet, we ended the quarter with net debt of $2.2 billion at a weighted-average interest rate of 3.4%. Our net debt to adjusted EBITDA ratio was 7.4x at the end of the quarter. The weighted-average debt maturity at the end of the third quarter 2021 was 4.5 years. The components of our debt include $500.0 million in senior notes, $118.7 million on the multi-currency revolving credit facility, $286.3 million on the term loan and $1.5 billion of outstanding gross mortgage debt. This debt was approximately 94% fixed rate, which is inclusive of floating rate debt with in-place interest rate swaps. The company has a well-cushioned interest coverage ratio of 3.4x. As of September 30, 2021, liquidity was approximately $280.4 million. The Company distributed $40.3 million in dividends to common shareholders in the quarter, or $0.40 per share.
Our net debt to enterprise value was 53.0% with an enterprise value of $4.2 billion based on the September 30, 2021 closing share price of $16.02 for common shares, $27.00 for Series A preferred shares and $27.90 for Series B preferred shares. With that, I'll turn the call back to Jim for some closing remarks.
James Nelson
Thank you, Chris.
I am very pleased with how GNL has continued to grow throughout this year. Broadly we have met and exceeded pre-pandemic performance levels across the company, including our rent collection, Cash NOI and Adjusted EBITDA figures when compared to the first quarter of 2020. More importantly, GNL's reputation as a premiere partner for strategic sale-leaseback transactions among US and European companies has grown exponentially during the same time. We are well-positioned to continue to execute on accretive, creative and exclusive transactions that further enhance our portfolio. I look forward to closing out this year strong and carrying that momentum into 2022.
With that, Operator, we can open the line for questions.
Question-and-Answer Session
Operator
[Operator Instructions]