Global Net Lease, Inc 8-K, filed Aug 4, 2022
Global Net Lease, Inc. (GNL)
About this 8-K
Global Net Lease, Inc filed this 8-K on August 4, 2022.
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)
(State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
(Address, including zip code, of Principal Executive Offices)
Registrant’s telephone number, 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:
| Title of each class | Trading Symbols | Name of each exchange on which registered | ||
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 August 4, 2022, Global Net Lease, Inc. (the “Company”) hosted a conference call to discuss its financial and operating results for the quarter ended June 30, 2022. 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 November 4, 2022 by telephone as follows:
Domestic Dial-In (Toll Free): 1-844-512-2921
International Dial-In: 1-412-317-6671
Conference Number: 13730903
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 actual results or events to be materially different. The words “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “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 (a) the potential adverse effects of (i) the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, and (ii) the geopolitical instability due to the ongoing military conflict between Russia and Ukraine, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on the Company, the Company’s tenants and the global economy and financial markets, and (b) that any potential future acquisition is subject to market conditions and capital availability and may not be completed on favorable terms, or at all, as well as those risks and uncertainties set forth in the Risk Factors section of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed on February 24, 2022 and all other filings filed with the Securities and Exchange Commission after that date. 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 to do so 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: August 4, 2022 | By: | /s/ James L. Nelson |
| Name: James L. Nelson | ||
| Title: Chief Executive Officer and President | ||
Exhibit 99.1
Global Net Lease, Inc. (NYSE:GNL) Q2 Earnings Conference Call
Operator
Good afternoon and welcome to the Global Net Lease Second Quarter 2022 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 Second Quarter 2022 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 this 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, 2021 filed on February 24, 2022 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 thie 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’ll now turn the call over to our CEO, Jim Nelson. Jim?
James Nelson
Thanks, Louisa, and thank you to everyone for joining us on today’s call. Our high-quality, mission-critical, net lease portfolio continues to perform well, with occupancy of 99% and complete cash rent collection for the seventh consecutive quarter. We are advancing our differentiated international and domestic strategy by increasing portfolio concentration in industrial and distribution assets, successfully extending and expanding leases, and building a pipeline of accretive acquisitions. Since the beginning of 2020, over 82% of GNL’s acquisitions have been industrial and distribution assets, increasing GNL’s ownership of this asset class to 55% of the portfolio. We believe our best-in-class portfolio is well positioned for meaningful capital appreciation and that our dividend provides shareholders a very compelling current yield.
Early in the second quarter we completed a recast of our corporate credit facility with a new, $1.45 billion revolving credit facility that has a four and a half year term and improved pricing that is 15 basis points lower than the facility it replaced, helping to ensure we can continue executing our growth strategy in the coming years. Importantly, 76% of our debt is fixed rate, providing meaningful certainty in a period of rising rates.
In the second quarter AFFO grew by 5% year-over-year and 1.6% quarter-over-quarter to $45 million with AFFO per share of $0.43. We paid dividends to common stockholders of $0.40 per share in the second quarter. The second quarter also continued to illustrate the value of our comprehensive hedging program, which minimized the impact of ongoing turbulence in the Euro and the Pound on GNL's results and permitted us to focus creating value for shareholders in our portfolio. With this protection in place, we were insulated from currency fluctuation that would have decreased our AFFO by nearly $1.5 million. Our unique global capabilities, strong balance sheet and best-in-class real estate assets continue to support GNL's positive performance.
In the second quarter our leasing momentum continued. Year-to-date, we have completed eight lease renewals and two tenant expansion projects, totaling 2.6 million square feet. The leasing adds $102 million of net new straight-line rent over the new weighted-average remaining lease term. Included in this leasing activity was a 10-year lease renewal with the GSA for a 28,000 square foot facility in Rapid City, South Dakota and two lease renewals with FedEx for properties in New York and Texas that total over 325,000 square feet and that pay $29 million in annualized straight-line rent. Thanks to our leasing efforts, our portfolio only has 1% of leases expiring this year and almost 74% of our leases do not expire until 2027 or later. We continue to engage with our tenants, building on the relationships we have established over the years, in order to extend leases well in advance of their expirations whenever possible.
1
At quarter end, our $4.5 billion, 311 property portfolio has a weighted average remaining lease term of 8.3 years. Geographically, 237 of our properties are in the U.S. and Canada and 74 are in the U.K. and Western Europe, representing 62% and 38% of annualized straight-line rent revenue, respectively. Our portfolio is well-diversified with approximately 140 tenants in 50 industries, with no single industry representing more than 12% of the whole portfolio, based on annual straight-line rent. Almost 95% of our leases feature annual rental increases which increase the cash rent that is due over time from these leases. Based on straight-line rent, approximately 60.9% of lease escalations are fixed-rate, 26.2% are based on the Consumer Price Index and seven and a half percent are based on other measures.
As we mentioned, we continue to expand the concentration of industrial properties in our portfolio. At the end of the second quarter, our assets were composed of 55% industrial and distribution, 42% office, and 3% retail, compared to 52% industrial and distribution, 43% office, and 5% retail at the end of the second quarter of 2021. Contributing to our success is our focus on tenant credit, industrial acquisitions and non-core retail dispositions over the last several years. Across the portfolio, over 62% of annual straight-line rent comes from Investment Grade or implied Investment Grade tenants.
In the second quarter we completed the acquisition of two industrial and one office property for a total purchase price of $33.3 million. The industrial properties are located in the US and the office property is a strategically located building that is leased to the Scottish Ministers, an Aa3 credit. These properties were acquired at a weighted average cap rate of 7.7% and had 13.6 years of lease term remaining. Our acquisitions pipeline is comprised of approximately $71 million of triple-net industrial property. Combined with the properties we have already acquired, these properties total over $104 million in purchase price have a weighted-average cap rate of 8% with 18.5 years of lease term remaining. We sold one property in the UK during the second quarter and have agreed on terms to sell two additional properties that would bring total dispositions to over $50 million for the year.
The value in our differentiated investment strategy is clear and we remain focused on acquiring single-tenant industrial and distribution properties in North America and Europe. We will continue to grow our portfolio by focusing on the highly dependable Industrial and Distribution asset class. Our successful lease renewals and expansions speak to the mission-critical nature of the properties that we own, where over 62% of rent is derived from Investment Grade Tenants and where the weighted-average remaining lease term exceeds eight years. We are well-positioned for the future and I look forward to building on our progress through the rest of the year.
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 second quarter 2022 we recorded revenue of $95.2 million, with a net loss attributable to common stockholders of $5.8 million. FFO and AFFO for the second quarter were $49.5 million and $45 million, respectively, or $0.48 and $0.43 per share. 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 $2.3 billion at a weighted-average interest rate of 3.5% and $111.2 million of cash and equivalents. Our net debt to trailing twelve month adjusted EBITDA ratio was 7.8x at the end of the quarter. The weighted-average debt maturity at the end of the second quarter 2022 was 4.3 years. The components of our debt include $500 million in senior notes, $558.9 million on the multi-currency revolving credit facility and $1.4 billion of outstanding gross mortgage debt. This debt was approximately 76% 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 3.5x. As of June 30, 2022, liquidity was approximately $197 million. The Company distributed $41.6 million in dividends to common shareholders in the quarter, or $0.40 per share.
Our net debt to enterprise value was 57.0% with an enterprise value of $4.1 billion based on the June 30, 2022 closing share price of $14.16 for common shares, $23.51 for Series A preferred shares and $23.57 for Series B preferred shares. With that, I'll turn the call back to Jim for some closing remarks.
James Nelson
Thank you, Chris.
2
I’m very pleased with our progress and accomplishments during the second quarter, including our earnings growth, acquisitions and leasing activity. The credit facility recast we advantageously completed secures our acquisition flexibility and we are well-positioned to continue to execute on our strategy and grow our best-in-class portfolio for years to come.
With that, Operator, we can open the line for questions.
Question-and-Answer Session
Operator
[Operator Instructions]
3