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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported):  November 8, 2019
 
Global Net Lease, Inc.
(Exact Name of Registrant as Specified in Charter)
 
Maryland
 
001-37390
 
45-2771978
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
 
405 Park Avenue, 3rd Floor
New York, New York 10022
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
(Address, including zip code, of Principal Executive Offices)

Registrant’s telephone number, including area code: (212) 415-6500

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
Common Stock, $0.01 par value
 
GNL
 
New York Stock Exchange
7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value
 
GNL PR A
 
New York Stock Exchange

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 2.02. Results of Operations and Financial Condition.
 
On November 8, 2019, Global Net Lease, Inc. (the “Company”) issued a press release announcing its results of operations for the quarter ended September 30, 2019, and supplemental financial information for the quarter ended September 30, 2019, attached hereto as Exhibits 99.1 and 99.2, respectively.
 
Item 7.01. Regulation FD Disclosure.
 
Press Release and Supplemental Information
 
As disclosed in Item 2.02 above, on November 8, 2019, the Company issued a press release announcing its results of operations for the quarter ended September 30, 2019, and supplemental financial information for the quarter ended September 30, 2019, attached hereto as Exhibits 99.1 and 99.2, respectively. The information set forth in Item 7.01 of this Current Report on Form 8-K and in the attached Exhibits 99.1 and 99.2 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 Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, 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 include statements regarding the intent, belief or current expectations of the Company and members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “strives,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements, including as a result of those factors set forth in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed on February 28, 2019 and all other filings with the SEC after that date. Forward-looking statements speak only as of the date they are made, and the 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, or revise forward-looking unless required by law.
 
Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit No.
 
Description
 
Press release dated November 8, 2019
 
 
 
 
Quarterly supplemental information for the quarter ended November 8, 2019
 
 
 
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 8, 2019
By:  
/s/ James L. Nelson 
 
 
 
Name:  
James L. Nelson
 
 
 
Title:
Chief Executive Officer and President
 



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Section 2: EX-99.1 (EXHIBIT 99.1 GNL EARNINGS RELEASE 9.30.19)

Exhibit


EXHIBIT 99.1

400902552_image3a29.gif    

FOR IMMEDIATE RELEASE
 

GLOBAL NET LEASE REPORTS THIRD QUARTER 2019 RESULTS
Company to Host Investor Conference Call Today at 11 AM Eastern


New York, November 8, 2019 - Global Net Lease, Inc. (NYSE: GNL) (“GNL” or the “Company”), a real estate investment trust focused on the acquisition and management of industrial and office properties leased long-term to high quality corporate tenants in select markets in the United States and Europe, announced today its financial and operating results for the quarter ended September 30, 2019.

Third Quarter 2019 Highlights

Revenue increased 8.4% to $77.9 million from $71.9 million in third quarter 2018
Net income attributable to common stockholders was $6.9 million or $0.08 per share as compared to $0.2 million or less than $0.01 per share in third quarter 2018
Core Funds from Operations (“Core FFO”) was $38.6 million or $0.45 per share as compared to $37.8 million or $0.54 per share in third quarter 2018
Adjusted Funds from Operations (“AFFO”) improved to $40.2 million as compared to $39.6 million in the prior year third quarter
AFFO per share was $0.47 as compared to $0.57 in third quarter 2018
Acquired nine industrial and office properties for a contract purchase price of $102.0 million at a 7.68% weighted average capitalization rate1  
$697.6 million of closed and pipeline acquisitions in 20192 at a weighted average capitalization rate of 7.76% with 13.6 years of remaining lease term3 
Reduced retail exposure from 9% in the third quarter 2018 to only 5% of portfolio with the sale of 33 properties, 32 of which were Family Dollar stores, for $53.0 million and a gain of $7.0 million
Portfolio 99.6% leased with an 8.0 year weighted average remaining lease term4 
Net debt to annualized adjusted EBITDA improved to 6.7x from 6.9x in third quarter 20185 
Strengthened balance sheet by extending weighted-average debt maturity to 5.7 years from 3.8 years at the close of the 2018 third quarter while weighted average interest rate remained flat at 3.0%.


James Nelson, Chief Executive Officer of GNL commented, “By continuing to execute on our investment strategy we recorded yet another quarter of year over year increased rental revenue, cash NOI, adjusted EBITDA and AFFO. The third quarter was extremely active for GNL, as we closed on $102 million of industrial and office acquisitions at a going-in cap rate of 6.64% and weighted average cap rate of 7.68%. Our forward looking $373 million pipeline will bring our year to date acquisitions to $697.6 million, including a $182 million portfolio of US and European assets in a sale leaseback transaction with a Fortune 150 tenant that we expect to close in the fourth quarter.”






 
 
Three Months Ended September 30,
(In thousands, except per share data)
 
2019
 
2018
Revenue from tenants
 
$
77,942

 
$
71,924

 
 
 
 
 
Net income attributable to common stockholders
 
$
6,860

 
$
177

Net income per diluted common share
 
$
0.08

 
$

 
 
 
 
 
NAREIT defined FFO attributable to common stockholders
 
$
37,878

 
$
32,305

NAREIT defined FFO per diluted common share
 
$
0.44

 
$
0.47

 
 
 
 
 
Core FFO attributable to common stockholders
 
$
38,633

 
$
37,752

Core FFO per diluted common share
 
$
0.45

 
$
0.54

 
 
 
 
 
AFFO attributable to common stockholders
 
$
40,235

 
$
39,598

AFFO per diluted common share
 
$
0.47

 
$
0.57


Property Portfolio
 
The Company’s portfolio consisted of 264 net lease properties located in seven countries and is comprised of 28.9 million rentable square feet leased to 120 tenants across 45 industries at September 30, 2019. The real estate portfolio metrics include:

99.6% leased with a remaining weighted-average lease term of 8.0 years
92.5% of the portfolio contains contractual rent increases based on square footage
70.7% of portfolio annualized straight-line rent derived from investment grade and implied investment grade rated tenants6 
59% U.S. and 41% Europe (based on annualized straight-line rent)
52% Office, 43% Industrial / Distribution and 5% Retail (based on an annualized straight-line rent)

Acquisition and Disposition Activity

During the third quarter 2019, the Company acquired nine net leased assets totaling approximately 0.9 million square feet for a contract sales price of approximately $102.0 million. These assets were purchased at a weighted average going-in capitalization rate of 6.64%7, and an overall weighted average capitalization rate of 7.68%1, with a weighted average remaining lease term of 17.1 years.

During the three months ended September 30, 2019, the Company sold 33 properties located in the United States (32 Family Dollar retail stores and one industrial property) for a total contract sales price of $53.0 million, resulting in a gain of $7.0 million.







Capital Structure and Liquidity Resources

As of September 30, 2019, the Company had $306.0 million of cash and cash equivalents. The Company’s net debt to enterprise value was 45.0% with an enterprise value of $3.5 billion based on the quarter end closing share price of $19.50 for common stock and $25.60 for the Series A preferred stock, with net debt of $1.6 billion8, including $1.4 billion of mortgage debt.

As of September 30, 2019, the percentage of fixed rate debt (including variable rate debt fixed with swaps) increased to 93.0% from 73.8% as of September 30, 2018. The Company’s total combined debt had a weighted average interest rate of 3.0% resulting in an interest coverage ratio of 4.1 times9. Debt maturity increased to 5.7 years as of September 30, 2019 from 3.8 years at September 30, 2018.

Credit Facility

The Company entered into an expansion of its credit facility with KeyBank to add over $300 million of additional commitments with total commitments of $1.235 billion on August 1, 2019. The expanded facility improved pricing by 15 bps on the revolving credit facility and by 20 bps on the term loan. Simultaneously, the term of the revolving credit facility was extended from 2021 to 2023, with the option to extend to 2024, and the term loan facility was extended from 2022 to 2024.

Subsequent Events

Acquisitions

The Company has signed four definitive purchase and sale agreements ("PSAs") to acquire 12 net lease properties in the United States, for approximately $93.5 million at a weighted average capitalization rate of 7.65%. The Company has signed four letters of intent ("LOIs") to acquire a total of 17 net lease properties, all located in the United States, Italy and Canada for an aggregate purchase price of $280.0 million at a weighted average capitalization rate of 7.82%. The PSAs are subject to conditions and the LOIs may not lead to a definitive agreement. There can be no assurance that the Company will complete any of these transactions, or any future acquisitions or other investments, on a timely basis or on acceptable terms and conditions, if at all.

Dispositions

The Company has entered into definitive agreements to dispose of three net lease properties located in Germany for €130.5 million and are expected to generate €68.0 million after repayment of associated debt. The agreements are subject to conditions. There can be no assurance the Company will complete any of these transactions, or any future dispositions or other investments, on a timely basis or on acceptable terms and conditions, if at all.







Footnotes/Definitions

1   Capitalization rate is a rate of return on a real estate investment property based on the expected, annualized straight-lined rental income that the property will generate under its existing lease. Capitalization rate is calculated by dividing the average annualized straight-line rental income the property will generate (before debt service and depreciation and after fixed costs and variable costs) and the purchase price of the property. The weighted average capitalization rate is based upon square feet as of the date of acquisition.
2 
Closed and pipeline acquisitions of $697.6 million during the period from January 1, 2019 to November 4, 2019 include: (i) two acquisitions for $23.4 million in purchase price completed in the first quarter of 2019; (ii) nine acquisitions for $187.3 million in purchase price completed in the second quarter of 2019; (iii) nine acquisitions for $102 million in purchase price completed in the third quarter of 2019 (iv) amendments to four leases whereby annual rent was increased at closing in exchange for the Company funding an aggregate amount of approximately $11.4 million in capital expenditures to expand and remodel four properties of a single tenant; (v) four definitive purchase and sale agreements (“PSA”) to acquire a total of 12 net lease properties located in the United States, for an aggregate purchase price of approximately $93.5 million; and (vi) four LOIs to acquire a total of 17 properties, eleven of which are located in the United States, for an aggregate purchase price of $280.0 million. The PSAs are subject to conditions and the LOIs may not lead to a definitive agreement. There can be no assurance the Company will complete any of these pending transactions on their contemplated terms, or at all.
3 
The weighted average remaining lease term in years is based upon square feet as of the date of acquisition.
4 
Weighted-average remaining lease term in years is based on square feet as of September 30, 2019.    
5 Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA"). Annualized based on third quarter 2019 Adjusted EBITDA multiplied by four.
6  
As used herein, “Investment Grade Rating” includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied Investment Grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody's analytical tool, which generates an implied rating by measuring a company's probability of default. Ratings information is as of September 30, 2019. Comprised of 39.3% leased to tenants with an actual investment grade rating and 31.4% leased to tenants with an Implied Investment Grade rating as of September 30, 2019.
7 
Going-in capitalization rate is a rate of return on a real estate investment property based on the expected, cash rental income that the property will generate under its existing lease during the first year of the lease. Going-in capitalization rate is calculated by dividing the cash rental income the property will generate during the first year of the lease (before debt service and depreciation and after fixed costs and variable costs) and the purchase price of the property. The weighted average going-in capitalization rate is based upon square feet of the date of acquisition.
8 Comprised of the principal amount of GNL's debt totaling $1.9 billion less cash and cash equivalents totaling $306.0 million, as of September 30, 2019.
9 The interest coverage ratio is calculated by dividing adjusted EBITDA by cash paid for interest (interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net) for the quarter ended September 30, 2019. Adjusted EBITDA and cash paid for interest are Non-GAAP metrics and are reconciled below.






Conference Call 
GNL will host a conference call on November 8, 2019 at 11:00 a.m. ET to discuss its financial and operating results. 
Dial-in instructions for the conference call and the replay are outlined below. This conference call will also be broadcast live over the Internet and can be accessed by all interested parties through the GNL website, www.globalnetlease.com, in the “Investor Relations” section.
To listen to the live call, please go to GNL’s “Investor Relations” section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the GNL website at www.globalnetlease.com.
Conference Call Details
Live Call
Dial-In (Toll Free): 1-888-317-6003
International Dial-In: 1-412-317-6061
Canada Dial-In (Toll Free): 1-866-284-3684
Participant Elite Entry Number: 4252341 
Conference Replay*
Domestic Dial-In (Toll Free): 1-877-344-7529
International Dial-In: 1-412-317-0088
Canada Dial-In (Toll Free): 1-855-669-9658
Conference Number: 10136148 
*Available one hour after the end of the conference call through February 8, 2020. 
Supplemental Schedules 
The Company will file supplemental information packages with the Securities and Exchange Commission (the “SEC”) to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the “Presentations” tab in the Investor Relations section of GNL’s website at www.globalnetlease.com and on the SEC website at www.sec.gov. 
About Global Net Lease, Inc. 
Global Net Lease, Inc. (NYSE: GNL) is a publicly traded real estate investment trust listed on the NYSE focused on acquiring a diversified global portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant, mission critical income producing net-leased assets across the United States, Western and Northern Europe. Additional information about GNL can be found on its website at www.globalnetlease.com. 
Important Notice 
The statements in this press release 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. 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 GNL, as well as the success that GNL may have in executing its business plan, are also forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause GNL’s actual results to differ materially from those contemplated by such forward-looking statements, including those 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 GNL’s Annual Report on Form 10-K for the year ended December 31, 2018 filed on February 28, 2019 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 GNL’s subsequent reports. Further, forward looking statements speak only as of the date they are made, and GNL 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.
Contacts: 
Investors and Media:
Email: [email protected]
Phone: (212) 415-6510





Global Net Lease, Inc.
Consolidated Balance Sheets
(In thousands)

 
 
September 30,
2019
 
December 31,
2018
ASSETS
 
(Unaudited)
 
 
Real estate investments, at cost:
 
 
 
 
Land
 
$
388,269

 
$
398,911

Buildings, fixtures and improvements
 
2,463,275

 
2,345,202

Construction in progress
 
8,185

 
1,235

Acquired intangible lease assets
 
641,307

 
675,551

Total real estate investments, at cost
 
3,501,036

 
3,420,899

Less accumulated depreciation and amortization
 
(499,507
)
 
(437,974
)
Total real estate investments, net
 
3,001,529

 
2,982,925

Assets held for sale
 
107,868

 
112,902

Cash and cash equivalents
 
305,962

 
100,324

Restricted cash
 
3,950

 
3,369

Derivative assets, at fair value
 
7,473

 
8,730

Unbilled straight-line rent
 
51,195

 
47,183

Operating lease right-of-use asset
 
49,274

 

Prepaid expenses and other assets
 
41,827

 
22,245

Due from related parties
 
20

 
16

Deferred tax assets
 
3,254

 
3,293

Goodwill and other intangible assets, net
 
21,595

 
22,180

Deferred financing costs, net
 
14,652

 
6,311

Total Assets
 
$
3,608,599

 
$
3,309,478

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Mortgage notes payable, net
 
$
1,366,818

 
$
1,129,807

Revolving credit facility
 
101,405

 
363,894

Term loan, net
 
389,885

 
278,727

Acquired intangible lease liabilities, net
 
31,559

 
35,757

Derivative liabilities, at fair value
 
10,638

 
3,886

Due to related parties
 
299

 
790

Accounts payable and accrued expenses
 
20,741

 
31,529

Operating lease liability
 
23,547

 

Prepaid rent
 
20,338

 
16,223

Deferred tax liability
 
14,603

 
15,227

Taxes payable
 
3

 
2,228

Dividends payable
 
3,416

 
2,664

Total Liabilities
 
1,983,252

 
1,880,732

Commitments and contingencies
 
 
 
 
Stockholders' Equity:
 
 
 
 
7.25% Series A cumulative redeemable preferred shares
 
67

 
54

Common stock
 
2,225

 
2,091

Additional paid-in capital
 
2,322,419

 
2,031,981

Accumulated other comprehensive (loss) income
 
(14,618
)
 
6,810

Accumulated deficit
 
(694,714
)
 
(615,448
)
Total Stockholders' Equity
 
1,615,379

 
1,425,488

Non-controlling interest
 
9,968

 
3,258

Total Equity
 
1,625,347

 
1,428,746

Total Liabilities and Equity
 
$
3,608,599

 
$
3,309,478







Global Net Lease, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share data)

 
 
Three Months Ended September 30,
 
 
2019
 
2018
Revenue from tenants
 
$
77,942

 
$
71,924

 
 
 
 
 
 Expenses:
 
 
 
 
Property operating
 
8,205

 
5,301

Fire recovery
 

 
31

Operating fees to related parties
 
8,220

 
6,956

Impairment charges
 
6,375

 

Acquisition, transaction and other costs
 
192

 
2,804

General and administrative
 
3,250

 
3,215

Equity-based compensation
 
2,501

 
2,053

Depreciation and amortization
 
31,620

 
30,195

       Total expenses
 
60,363

 
50,555

Operating income before gain on dispositions of real estate investments
 
17,579

 
21,369

Gain (loss) on dispositions of real estate investments
 
6,977

 
(1,933
)
              Operating income
 
24,556

 
19,436

Other income (expense):
 
 
 
 
Interest expense
 
(16,154
)
 
(15,104
)
Loss on extinguishment of debt
 
(563
)
 
(2,612
)
Gain on derivative instruments
 
3,044

 
1,290

Unrealized loss on undesignated foreign currency advances and other hedge ineffectiveness
 

 
108

Other income
 
(2
)
 
44

       Total other expense, net
 
(13,675
)
 
(16,274
)
Net income before income taxes
 
10,881

 
3,162

Income tax expense
 
(940
)
 
(530
)
Net income
 
9,941

 
2,632

Preferred stock dividends
 
(3,081
)
 
(2,455
)
Net income attributable to common stockholders
 
$
6,860

 
$
177

 
 
 
 
 
Basic and Diluted Earnings Per Share:
 
 
 
 
Basic and diluted net income per share attributable to common stockholders
 
$
0.08

 
$

 
 
 
 
 
Basic weighted average shares outstanding
 
85,255

 
69,442

Diluted weighted average shares outstanding
 
86,203

 
69,442










Global Net Lease, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)
 
 
 
Three Months Ended September 30,
 
 
2019
 
2018
Adjusted EBITDA
 
 
 
 
Net income
 
$
9,941

 
$
2,632

Depreciation and amortization
 
31,620

 
30,195

Interest expense
 
16,154

 
15,104

Income tax expense
 
940

 
530

Impairment charges
 
6,375

 

Equity-based compensation
 
2,501

 
2,053

Non-cash portion of incentive fee
 

 
180

Acquisition and transaction related
 
192

 
2,804

(Gain) loss on dispositions of real estate investments
 
(6,977
)
 
1,933

Fire recovery
 

 
31

Gain on derivative instruments
 
(3,044
)
 
(1,290
)
Unrealized income on undesignated foreign currency advances and other hedge ineffectiveness
 

 
(108
)
Loss on extinguishment of debt
 
563

 
2,612

Other loss (income)
 
2

 
(44
)
Adjusted EBITDA
 
58,267

 
56,632

 
 
 
 
 
Net operating income (NOI)
 
 
 
 
Operating fees to related parties
 
8,220

 
6,956

General and administrative
 
3,250

 
3,215

NOI
 
69,737

 
66,803

Amortization of above- and below- market leases and ground lease assets and liabilities, net
 
341

 
488

Straight-line rent
 
(1,506
)
 
(1,492
)
  Cash NOI
 
$
68,572

 
$
65,799

 
 
 
 
 
Cash Paid for Interest:
 
 
 
 
   Interest Expense
 
$
16,154

 
$
15,104

   Non-cash portion of interest expense
 
(1,906
)
 
(1,339
)
   Amortization of mortgage (discount) premium, net
 
(30
)
 
(601
)
   Total cash paid for interest
 
$
14,218

 
$
13,164








Global Net Lease, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)

 
 
Three Months Ended September 30,
 
 
2019
 
2018
Net income attributable to stockholders (in accordance with GAAP)
 
$
6,860

 
$
177

   Impairment charges
 
6,375

 

   Depreciation and amortization
 
31,620

 
30,195

   (Gain) loss on dispositions of real estate investments
 
(6,977
)
 
1,933

FFO (defined by NAREIT) [1]
 
37,878

 
32,305

   Acquisition, transaction and other costs [2]
 
192

 
2,804

   Loss on extinguishment of debt [3]
 
563

 
2,612

   Fire loss [4]
 

 
31

Core FFO attributable to common stockholders [1]
 
38,633

 
37,752

   Non-cash equity-based compensation
 
2,501

 
2,053

   Non-cash portion of incentive fee
 

 
180

   Non-cash portion of interest expense
 
1,906

 
1,339

   Amortization of above- and below-market leases and ground lease assets and liabilities, net
 
341

 
488

   Straight-line rent
 
(1,506
)
 
(1,492
)
   Unrealized income on undesignated foreign currency advances and other hedge ineffectiveness
 

 
(108
)
   Eliminate unrealized gains on foreign currency transactions [5]
 
(1,670
)
 
(1,215
)
   Amortization of mortgage discounts and premiums, net
 
30

 
601

Adjusted funds from operations (AFFO) attributable to common stockholders [1]
 
$
40,235

 
$
39,598

Footnotes:
[1] For the three months ended September 30, 2018 includes income from a lease termination fee of $3.0 million, which is recorded in rental income in the unaudited consolidated statements of operations, related to a real estate asset sold during the three months ended September 30, 2018.
[2] For the three months ended September 30, 2019, primarily includes litigation costs resulting from the termination of the Former Service Provider. For the three months ended September 30, 2018, primarily includes litigation costs resulting from the termination of the Former Service Provider, costs to refinance foreign debt and fees associated with the exploration of a potential equity offering.
[3] For the three months ended September 30, 2018, includes non-cash write-off of deferred financing costs of $1.5 million and prepayment penalties paid
on early extinguishment of debt of $1.1 million.
[4] Recovery arising from clean-up costs related to a fire sustained at one of our office properties. 
[5] For AFFO purposes, we add back unrealized (gain) loss. For the three months ended September 30, 2019, gains on derivative instruments were $3.0 million, which consisted of unrealized gains of $1.7 million and realized gains of $1.3 million. For the three months ended September 30, 2018, gains on derivative instruments were $1.3 million, which consisted of unrealized gains of $1.2 million and realized gains of $0.1 million.






Caution on Use of Non-GAAP Measures

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”), and Net Operating Income (“NOI”) 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.

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 reflect the proportionate share of adjustments for non-controlling interest to arrive at FFO, Core FFO and AFFO, as applicable.

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. 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, especially if not adequately maintained or repaired and renovated as required by relevant circumstances or as requested or required by lessees for operational purposes in order to maintain the value disclosed. 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 acquisition, transaction and other costs, 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 operations derived from 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 (adjustment included in Core FFO) and 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 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. By providing AFFO, we believe we are presenting useful information that can be used to better assess the sustainability of our ongoing operating performance without the impact of transactions or other items that are not related to the ongoing performance of our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently.

In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income. All paid and accrued merger, acquisition, transaction and other costs (including prepayment penalties for debt extinguishments) and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired will also have negative effects on returns to investors, but are not reflective of 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. We believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net income (loss) as 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, and Net Operating Income

We believe that Adjusted EBITDA, which is 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. 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.



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Section 3: EX-99.2 (EXHIBIT 99.2 GNL SUPPLEMENTAL 9.30.19)

Exhibit
EXHIBIT 99.2






Global Net Lease, Inc.
Supplemental Information

Quarter ended September 30, 2019 (unaudited)





Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)


Table of Contents
 
 
 
 
 
Item
 
Page
Non-GAAP Definitions
 
3
Key Metrics
 
6
Consolidated Balance Sheets
 
7
Consolidated Statements of Operations
 
8
Non-GAAP Measures
 
9
Debt Overview
 
11
Future Minimum Lease Rents
 
12
Top Ten Tenants
 
13
Diversification by Property Type
 
14
Diversification by Tenant Industry
 
15
Diversification by Geography
 
16
Lease Expirations
 
17
 
 
 
Please note that totals may not add due to rounding.
 
 

Forward-looking Statements:
 
This supplemental package 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 GNL, as well as the success that GNL may have in executing its business plan, are also forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause GNL’s actual results to differ materially from those contemplated by such forward-looking statements, including those 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 GNL’s Annual Report on Form 10-K for the year ended December 31, 2018 filed on February 28, 2019 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 GNL’s subsequent reports. Further, forward looking statements speak only as of the date they are made, and GNL 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. Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company (or to third parties making the forward-looking statements).



2


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Non-GAAP Financial Measures
This section includes non-GAAP financial measures, including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”) and Adjusted Funds from Operations (“AFFO”), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Net Operating Income (“NOI”), and Cash Net Operating Income (“Cash NOI”). 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, and Cash NOI 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.
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 reflect the proportionate share of adjustments for non-controlling interest to arrive at FFO, Core FFO and AFFO, as applicable.
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 partnerships and joint ventures are calculated to reflect FFO. 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, especially if not adequately maintained or repaired and renovated as required by relevant circumstances or as requested or required by lessees for operational purposes in order to maintain the value disclosed. 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,

3


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

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 acquisition, transaction and other costs, 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 operations derived from 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 (adjustment included in Core FFO) and 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 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. By providing AFFO, we believe we are presenting useful information that can be used to better assess the sustainability of our ongoing operating performance without the impact of transactions or other items that are not related to the ongoing performance of our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently.
In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income. All paid and accrued merger, acquisition, transaction and other costs (including prepayment penalties for debt extinguishments) and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired will also have negative effects on returns to investors, but are not reflective of 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.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income, and Cash Net Operating Income.
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. 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

4


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

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 present Cash NOI.



5


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Key Metrics
As of and for the three months ended September 30, 2019
Amounts in thousands, except per share data, ratios and percentages
Financial Results
 
 
Revenue from tenants
 
$
77,942

Net income attributable to common stockholders
 
$
6,860

Basic and diluted net income per share attributable to common stockholders [1]
 
$
0.08

Cash NOI [2]
 
$
68,572

Adjusted EBITDA [2]
 
$
58,267

AFFO attributable to common stockholders [2]
 
$
40,235

Dividends per share - second quarter [3]
 
$
0.53

Dividend yield - annualized, based on quarter end share price
 
10.9
%
 
 
 
Balance Sheet and Capitalization
 
 
Equity market capitalization - based on quarter end share price of $19.50 for common shares and $25.60 for preferred shares
 
$
1,915,509

Net debt [4] [5]
 
1,570,343

Enterprise value
 
3,485,852

 
 
 
Total capitalization
 
3,791,814

 
 
 
Total consolidated debt [5]
 
1,876,305

Total assets
 
3,608,599

Liquidity [6]
 
407,149

 
 
 
Common shares outstanding as of September 30, 2019 (thousands)
 
89,458

Share price, end of quarter
 
$
19.50

 
 
 
Net debt to enterprise value
 
45.0
%
Net debt to adjusted EBITDA (annualized)
 
6.7
x
 
 
 
Weighted-average interest rate cost [7]
 
3.0
%
Weighted-average debt maturity (years) [8]
 
5.7

Interest Coverage Ratio [9]
 
4.1
x
 
 
 
Real Estate Portfolio
 
 
Number of properties
 
264

Number of tenants
 
120

 
 
 
Square footage (millions)
 
28.9

Leased
 
99.6
%
Weighted-average remaining lease term (years) [10]
 
8.0

Footnotes:
[1]  Adjusted for net income (loss) attributable to common stockholders for common share equivalents.
[2]  This Non-GAAP metric is reconciled below.
[3]  Represents quarterly dividend per share rate based off the annualized dividend rate of $2.13.
[4]  Includes the effect of cash and cash equivalents.
[5]  Excludes the effect of deferred financing costs, net and mortgage (discount) premium, net.
[6]  Liquidity includes $101.2 million of availability under the credit facility and cash and cash equivalents.
[7]  The weighted average interest rate cost is based on the outstanding principal balance of the debt.
[8]  The weighted average debt maturity is based on the outstanding principal balance of the debt.
[9] The interest coverage ratio is calculated by dividing adjusted EBITDA by cash paid for interest (interest expense less non cash portion of interest expense and amortization of mortgage (discount) premium, net) for the quarter ended September 30, 2019.  Adjusted EBITDA and cash paid for interest are Non-GAAP metrics and are reconciled below.
[10] The weighted-average remaining lease term (years) is based on square feet.


6

Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019


Consolidated Balance Sheets
Amounts in thousands
 
 
September 30,
2019
 
December 31,
2018
 
 
(Unaudited)
 
 
ASSETS
 
 
 
 
Real estate investments, at cost:
 
 
 
 
Land
 
$
388,269

 
$
398,911

Buildings, fixtures and improvements
 
2,463,275

 
2,345,202

Construction in progress
 
8,185

 
1,235

Acquired intangible lease assets
 
641,307

 
675,551

Total real estate investments, at cost
 
3,501,036

 
3,420,899

Less accumulated depreciation and amortization
 
(499,507
)
 
(437,974
)
Total real estate investments, net
 
3,001,529

 
2,982,925

Assets held for sale
 
107,868

 
112,902

Cash and cash equivalents
 
305,962

 
100,324

Restricted cash
 
3,950

 
3,369

Derivative assets, at fair value
 
7,473

 
8,730

Unbilled straight-line rent
 
51,195

 
47,183

Operating lease right-of-use asset
 
49,274

 

Prepaid expenses and other assets
 
41,827

 
22,245

Due from related parties
 
20

 
16

Deferred tax assets
 
3,254

 
3,293

Goodwill and other intangible assets, net
 
21,595

 
22,180

Deferred financing costs, net
 
14,652

 
6,311

Total Assets
 
$
3,608,599

 
$
3,309,478

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Mortgage notes payable, net
 
$
1,366,818

 
$
1,129,807

Revolving credit facility
 
101,405

 
363,894

Term loan, net
 
389,885

 
278,727

Acquired intangible lease liabilities, net
 
31,559

 
35,757

Derivative liabilities, at fair value
 
10,638

 
3,886

Due to related parties
 
299

 
790

Accounts payable and accrued expenses
 
20,741

 
31,529

Operating lease liability
 
23,547

 

Prepaid rent
 
20,338

 
16,223

Deferred tax liability
 
14,603

 
15,227

Taxes payable
 
3

 
2,228

Dividends payable
 
3,416

 
2,664

Total Liabilities
 
1,983,252

 
1,880,732

Commitments and contingencies
 

 

Stockholders’ Equity:
 
 
 
 
7.25% Series A cumulative redeemable preferred shares
 
67

 
54

Common stock
 
2,225

 
2,091

Additional paid-in capital
 
2,322,419

 
2,031,981

Accumulated other comprehensive (loss) income
 
(14,618
)
 
6,810

Accumulated deficit
 
(694,714
)
 
(615,448
)
Total Stockholders’ Equity
 
1,615,379

 
1,425,488

Non-controlling interest
 
9,968

 
3,258

Total Equity
 
1,625,347

 
1,428,746

Total Liabilities and Equity
 
$
3,608,599

 
$
3,309,478



7


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Consolidated Statements of Operations
Amounts in thousands, except per share data

 
 
Three Months Ended
 
 
September 30,
2019
 
June 30,
2019
 
March 31, 2019
 
December 31,
2018
Revenue from tenants
 
$
77,942

 
$
76,119

 
$
75,468

 
$
71,226

 
 
 
 
 
 
 
 
 
 Expenses:
 
 
 
 
 
 
 
 
Property operating
 
8,205

 
7,049

 
7,359

 
7,750

Fire (recovery) loss
 

 

 

 
(1
)
Operating fees to related parties
 
8,220

 
8,162

 
8,043

 
7,309

Impairment charges and related lease intangible write-offs
 
6,375

 

 

 
5,000

Acquisition, transaction and other costs
 
192

 
847

 
262

 
8,607

General and administrative
 
3,250

 
2,318

 
3,206

 
2,617

Equity-based compensation
 
2,501

 
2,429

 
2,109

 
1,451

Depreciation and amortization
 
31,620

 
31,084

 
31,303

 
30,078

Total expenses
 
60,363

 
51,889

 
52,282

 
62,811

Operating income before loss on dispositions of real estate investments
 
17,579

 
24,230

 
23,186

 
8,415

Gain (loss) on dispositions of real estate investments
 
6,977

 
6,923

 
892

 

Operating income
 
24,556

 
31,153

 
24,078

 
8,415

Other income (expense):
 
 
 
 
 
 
 
 
Interest expense
 
(16,154
)
 
(15,689
)
 
(15,162
)
 
(15,479
)
Loss on extinguishment of debt
 
(563
)
 
(765
)
 

 

Gain on derivative instruments
 
3,044

 
1,390

 
240

 
2,950

Unrealized gain (loss) on undesignated foreign currency advances and other hedge ineffectiveness
 

 

 
76

 
(452
)
Other income (expense)
 
(2
)
 
19

 
4

 
(90
)
Total other expense, net
 
(13,675
)
 
(15,045
)
 
(14,842
)
 
(13,071
)
Net income (loss) before income taxes
 
10,881

 
16,108

 
9,236

 
(4,656
)
Income tax (expense) benefit
 
(940
)
 
(780
)
 
(960
)
 
366

Net income (loss)
 
9,941

 
15,328

 
8,276

 
(4,290
)
Preferred stock dividends
 
(3,081
)
 
(2,707
)
 
(2,485
)
 
(2,454
)
Net income (loss) attributable to common stockholders
 
$
6,860

 
$
12,621

 
$
5,791

 
$
(6,744
)
 
 
 
 
 
 
 
 
 
Basic and Diluted Earnings Per Share:
 
 
 
 
 
 
 
 
Basic and diluted net income (loss) per share attributable to common stockholders
 
$
0.08

 
$
0.15

 
$
0.07

 
$
(0.09
)
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
85,255

 
83,847

 
81,475

 
73,554

Diluted
 
86,203

 
85,166

 
82,798

 
74,001



8


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Non-GAAP Measures
Amounts in thousands, except per share data
 
 
Three Months Ended
 
 
September 30,
2019
 
June 30,
2019
 
March 31, 2019
 
December 31,
2018
EBITDA:
 
 
 
 
 
 
 
 
Net income (loss)
 
$
9,941

 
$
15,328

 
$
8,276

 
$
(4,290
)
Depreciation and amortization
 
31,620

 
31,084

 
31,303

 
30,078

Interest expense
 
16,154

 
15,689

 
15,162

 
15,479

Income tax expense (benefit)
 
940

 
780

 
960

 
(366
)
   EBITDA
 
58,655

 
62,881

 
55,701

 
40,901

Impairment charges and related lease intangible write-offs
 
6,375

 

 

 
5,000

Equity-based compensation
 
2,501

 
2,429

 
2,109

 
1,451

Non-cash portion of incentive fee
 

 

 

 
(180
)
Acquisition, transaction and other costs
 
192

 
847

 
262

 
8,607

Gain on dispositions of real estate investments
 
(6,977
)
 
(6,923
)
 
(892
)
 

Fire (recovery) loss
 

 

 

 
(1
)
Gain on derivative instruments
 
(3,044
)
 
(1,390
)
 
(240
)
 
(2,950
)
Unrealized (income) loss on undesignated foreign currency advances and other hedge ineffectiveness
 

 

 
(76
)
 
452

Loss on extinguishment of debt
 
563

 
765

 

 

Other loss (income)
 
2

 
(19
)
 
(4
)
 
90

   Adjusted EBITDA
 
58,267

 
58,590

 
56,860

 
53,370

Operating fees to related parties
 
8,220

 
8,162

 
8,043

 
7,309

General and administrative
 
3,250

 
2,318

 
3,206

 
2,617

   NOI
 
69,737

 
69,070

 
68,109

 
63,296

Amortization of above- and below- market leases and ground lease assets and liabilities, net
 
341

 
344

 
337

 
590

Straight-line rent
 
(1,506
)
 
(1,931
)
 
(1,626
)
 
(1,482
)
  Cash NOI
 
$
68,572

 
$
67,483

 
$
66,820

 
$
62,404

 
 
 
 
 
 
 
 
 
Cash Paid for Interest:
 
 
 
 
 
 
 
 
   Interest Expense
 
$
16,154

 
$
15,689

 
$
15,162

 
$
15,479

   Non-cash portion of interest expense
 
(1,906
)
 
(1,177
)
 
(1,742
)
 
(1,454
)
   Amortization of mortgage (discount) premium, net
 
(30
)
 
(100
)
 
(102
)
 
(118
)
   Total cash paid for interest
 
$
14,218

 
$
14,412

 
$
13,318

 
$
13,907




9


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Non-GAAP Measures
Amounts in thousands, except per share data
 
 
Three Months Ended
 
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Funds from operations (FFO):
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders (in accordance with GAAP)
 
$
6,860

 
$
12,621

 
$
5,791

 
$
(6,744
)
Impairment charges and related lease intangible write-offs
 
6,375

 

 

 
5,000

Depreciation and amortization
 
31,620

 
31,084

 
31,303

 
30,078

Gain on dispositions of real estate investments
 
(6,977
)
 
(6,923
)
 
(892
)
 

FFO (as defined by NAREIT) attributable to common stockholders
 
37,878

 
36,782

 
36,202

 
28,334

Acquisition, transaction and other costs [1]
 
192

 
847

 
262

 
8,607

Loss on extinguishment of debt [2]
 
563

 
765

 

 

Fire recovery [3]
 

 

 

 
(1
)
Core FFO attributable to common stockholders
 
38,633

 
38,394

 
36,464

 
36,940

Non-cash equity-based compensation
 
2,501

 
2,429

 
2,109

 
1,451

Non-cash portion of incentive fee
 

 

 

 
(180
)
Non-cash portion of interest expense
 
1,906

 
1,177

 
1,742

 
1,454

Amortization of above and below-market leases and ground lease assets and liabilities, net
 
341

 
344

 
337

 
590

Straight-line rent
 
(1,506
)
 
(1,931
)
 
(1,626
)
 
(1,482
)
Unrealized (income) loss on undesignated foreign currency advances and other hedge ineffectiveness
 

 

 
(76
)
 
452

Eliminate unrealized (gains) losses on foreign currency transactions [4]
 
(1,670
)
 
(455
)
 
452

 
(2,206
)
Amortization of mortgage discounts and premiums, net
 
30

 
100

 
102

 
118

Adjusted funds from operations (AFFO) attributable to common stockholders
 
$
40,235

 
$
40,058

 
$
39,504

 
$
37,137

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - Basic
 
85,255

 
83,847

 
81,475

 
73,554

Weighted average common shares outstanding - Diluted
 
86,203

 
85,166

 
82,798

 
74,001

Net income (loss) per share attributable to common shareholders
 
$
0.08

 
$
0.15

 
$
0.07

 
$
(0.09
)
FFO per diluted common share
 
$
0.44

 
$
0.43

 
$
0.44

 
$
0.38

Core FFO per diluted common share
 
$
0.45

 
$
0.45

 
$
0.44

 
$
0.50

AFFO per diluted common share
 
$
0.47

 
$
0.47

 
$
0.48

 
$
0.50

Dividends declared [5]
 
$
45,028

 
$
14,940

 
$
43,297

 
$
39,119

Footnotes:
[1] Primarily includes litigation costs resulting from the termination of the Former Service Provider and fees associated with the exploration of a potential equity offering.
[2] For the three months ended September 30, 2019 and June 30, 2019, primarily includes non-cash write-off of deferred financing costs.
[3] Recovery arising from clean-up costs related to a fire sustained at one of our office properties. 
[4] For AFFO purposes, we add back unrealized (gain) loss. For the three months ended September 30, 2019, gains on derivative instruments were $3.0 million which consisted of unrealized gains of $1.7 million and realized gains of $1.3 million. For the three months ended June 30, 2019, gains on derivative instruments were $1.4 million which consisted of unrealized gains of $0.5 million and realized gains of $0.9 million. For the three months ended March 31, 2019, gains on derivative instruments were $0.2 million which consisted of unrealized losses of $0.5 million and realized gains of $0.7 million. For the three months ended December 31, 2018, gains on derivative instruments were $3.0 million, which were comprised of unrealized gains of $2.2 million and realized gains of $0.8 million. 
[5] Dividends declared to common stockholders only, and do not include distributions to non-controlling interest holders or holders of Series
A Preferred Stock.

10


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Debt Overview
As of September 30, 2019

Year of Maturity
 
Number of Encumbered Properties
 
Weighted-Average Debt Maturity (Years)
 
Weighted-Average Interest Rate [1]
 
Total Outstanding Balance [2] (In thousands)
 
Percent
Non-Recourse Debt
 
 
 
 
 
 
 
 
 
 
2019 (remainder)
 
6

 
0.2

 
1.7
%
 
$
122,816

 
 
2020
 
2

 
1.1

 
1.6
%
 
15,830

 
 
2021
 
2

 
1.7

 
1.3
%
 
11,463

 
 
2022
 

 

 
%
 

 
 
2023
 
47

 
3.9

 
3.0
%
 
330,734

 
 
2024
 
8

 
4.6

 
1.5
%
 
211,789

 
 
Thereafter
 
56

 
9.2

 
4.3
%
 
689,749

 
 
Total Non-Recourse Debt
 
121

 
6.2

 
3.3
%
 
1,382,381

 
74
%
 
 
 
 
 
 
 
 
 
 
 
Recourse Debt
 
 
 
 
 
 
 
 
 
 
   Revolving Credit Facility
 
 
 
2.6

 
3.3
%
 
101,405

 
 
   Term Loan
 
 
 
4.8

 
1.9
%
 
392,519

 
 
Total Recourse Debt
 
 
 
4.4

 
2.2
%
 
493,924

 
26
%
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
 
 
5.7

 
3.0
%
 
$
1,876,305

 
100
%
 
 
 
 
 
 
 
 
 
 
 
Total Debt by Currency
 
 
 
 
 
 
 
Percent
 
 
USD
 
 
 
 
 
 
 
40
%
 
 
EUR
 
 
 
 
 
 
 
43
%
 
 
GBP
 
 
 
 
 
 
 
17
%
 
 
Total
 
 
 
 
 
 
 
100
%
 
 

Footnotes:
 
[1] As of September 30, 2019, the Company’s total combined debt was 93.0% fixed rate or swapped to a fixed rate and 7.0% floating rate.
 
[2] Excludes the effect of deferred financing costs, net and mortgage (discount) premium, net. Current balances as of September 30, 2019 are shown in the year the debt matures.
 



11


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Future Minimum Lease Rents
As of September 30, 2019
Amounts in thousands

 
 
Future Minimum
Base Rent Payments
[1]
2019 (remainder)
 
$
71,010

2020
 
285,409

2021
 
286,619

2022
 
277,834

2023
 
255,818

2024
 
213,361

Thereafter
 
788,523

Total
 
$
2,178,574

Footnotes:
[1] Base rent assumes exchange rates of £1.00 to $1.23 for GBP and €1.00 to $1.09 for EUR as of September 30, 2019 for illustrative purposes, as applicable.


12


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Top Ten Tenants
As of September 30, 2019
Amounts in thousands, except percentages

Tenant / Lease Guarantor
 
Property Type
 
Tenant Industry
 
Annualized SL Rent [1]
 
SL Rent Percent
FedEx
 
Distribution
 
Freight
 
$
13,495

 
5
%
Government Services Administration (GSA)
 
Office
 
Government
 
12,041

 
4
%
Foster Wheeler
 
Office
 
Engineering
 
10,448

 
4
%
RWE AG
 
Office
 
Utilities
 
10,404

 
4
%
ING Bank
 
Office
 
Financial Services
 
8,881

 
3
%
Finnair
 
Industrial
 
Aerospace
 
8,673

 
3
%
Penske
 
Distribution
 
Logistics
 
8,500

 
3
%
Contractors Steel
 
Industrial
 
Metal Processing
 
7,936

 
3
%
Trinity Health
 
Office
 
Healthcare
 
6,584

 
2
%
Harper Collins
 
Distribution
 
Publishing
 
6,312

 
2
%
Subtotal
 
 
 
 
 
93,274

 
33
%
 
 
 
 
 
 
 
 
 
Remaining portfolio
 
 
 
 
 
196,603

 
67
%
 
 
 
 
 
 
 
 
 
Total Portfolio
 
 
 
 
 
$
289,877

 
100
%

Footnotes:
 
[1] SL Rent (Straight-line rent) is on an annualized basis and assumes exchange rates of £1.00 to $1.23 for GBP and €1.00 to $1.09 for EUR as of September 30, 2019 for illustrative purposes, as applicable.




13


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Diversification by Property Type
As of September 30, 2019
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
 
$
149,313

 
52
%
 
8,749

 
30
%
 
 
$
30,770

 
33
%
 
1,814

 
19
%
Industrial
 
78,981

 
27
%
 
12,118

 
42
%
 
 
47,437

 
52
%
 
6,590

 
67
%
Distribution
 
46,342

 
16
%
 
6,747

 
23
%
 
 
8,669

 
9
%
 
1,039

 
11
%
Retail
 
15,241

 
5
%
 
1,325

 
5
%
 
 
5,063

 
6
%
 
265

 
3
%
Total
 
$
289,877

 
100
%
 
28,939

 
100
%
 
 
$
91,939

 
100
%
 
9,708

 
100
%
 
Footnotes:

[1] SL Rent (Straight-line rent) is on an annualized basis and assumes exchange rates of £1.00 to $1.23 for GBP and €1.00 to $1.09 for EUR as of September 30, 2019 for illustrative purposes, as applicable.

[2] Includes properties on the credit facility borrowing base.

14


Global Net Lease, Inc.
Supplemental Information
Quarter ended September 30, 2019 (Unaudited)

Diversification by Tenant Industry
As of September 30, 2019
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
 
$
32,886

 
11
%
 
2,316

 
8
%
 
 
$
3,025

 
3
%
 
190

 
2
%
Technology
 
19,851

 
7
%
 
1,038

 
4