Global Net Lease (GNL) 3 Nov 222022 Q3 Earnings call transcript

Good afternoon and welcome to the Global Net Lease Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I would now like to turn the conference over to, Curtis Parker, [ph] Senior Vice President. Please go ahead.

you. Thank and Earnings joining Call. everyone, third for you XXXX quarter thank afternoon, us for GNL's Good This Investor GNL's Relations is section call being of website webcast at in the www.globalnetlease.com.

actual discussion to results by the you the and Officer; that those uncertainties. date filed of Masterson, filings, forward-looking refer XXXX, on XX-K GNL's The of discuss today statements, Form call Chief February Officer. Chris call this these during for these date forward-looking of XX, uncertainties factors Financial a SEC information materialize, for statements that subject this me as Nelson, GNL's the after risk conference on all the this with the forward-looking expressed We Joining quarter's Any following more are our Chief XXXX risks which the of Jim Executive ended from filings materially XX, to SEC implied or year contains to could call. results differences. December Should more risks cause all differ provided one the and are made statements. or only may and or of are including other detailed

useful and or be to prepared in in financial Company's term website. by information which results about statements, in over the most believe throughout with will filings, disclaims turn use refer stated non-GAAP performance. directly Jim? should we obligation evaluating our call. we a investment to as or today's isolation, discuss considered these our in a more not financial Please Also tenants, the our earnings are I'll implied GNL As CEO, call accordance call, what to posted our measures which Jim be revise now today's to can for substitute grade measures, Nelson. in be consider reconciliation financial These for during except any A earnings measures SEC comparable the or our GAAP. is law. intent update required these our forward-looking as also we release to to measures available supplement, release of we will

joining thank Thanks, to Curtis. on everyone today's us And call. you for

net Our well. office portfolio perform continues to mission-critical high-quality, industrial lease and

per to compelling $X.XX domestic concentration the and advancing asset meaningful successfully maintaining $XX.X increasing over average our In XX% the currency AFFO differentiated the in been share million and that XX% current of quarter, to have would have million million. by and revenues revenues million. $X.X XXXX, monthly million pipeline GNL's acquisitions. strategy industrial expanding portfolio constant year-over-year, Using up industrial extending beginning or by our class second a XX% by distribution of XXXX, concept or we grew international our constant Since been same GNL's We currency and and and acquisitions $XX.X occupancy the of We have assets, building per core On best-in-class of a $XX.X attractive capital are a provides assets, this $XX.X would basis, appreciation ownership when currency dividend shareholders yield. million X.X% for distribution $X.X well-positioned was up the is the to been FFO very third increasing believe rates portfolio. of and from by year-over-year applied $X.XX to share. portfolio leases,

U.S. AFFO relative dollar and the the was by Our the pound. to impacted euro strengthening of

sheet strong the helped positive estate of impact reduce program and of unique global performance. assets million continue and We support strengthening realized capabilities, the hedging balance comprehensive $X.X this to real best-in-class think our our GNL's quarter. However, gains we

our nearly year-to-date leasing we lease momentum. completed to third renewals one totaling expansion XXXX build to asset is and million square continue for our tenant two activity and feet, quarter, X.X project, One of areas square the feet. of bringing In focus management, we XXX,XXX

XXXX of team almost has our balance and XXXX properties XX% include U.S., and We end, North adds quarter to remaining until of a leases X.X the in weighted in grade net Whirlpool. Building our of respectively. government, expansion portfolio U.S. from signing with months the our portfolio located of X.X XX X% the established million Western as UK. leasing also state nine been year signed UK of and are the years. term year-to-date of this lease The X.X of new FedEx our convenience such only Indiana, the tenants XXX in billion, of tenants Thanks new on first owns years. relationships are XX% Europe, The the we the renewal and has time, efforts, average remaining lease leasing small term leasing up for management expiring our leases rent and new successful later. XXX store over Canada, in very a have America $XXX average year not our the this leases or Netherlands years, signed in the France property $X.X in for straight had Company XX% one asset lease annualized At representing revenue, Europe. U.S. during with straight-line of weighted over line UK, and expiring properties and and and the strong rent investment Geographically, the the the

no consumer feature straight-line over escalations, diversified tenant XX% portfolio, on on rental whole XX.X% that that rent of annual Based the the leases cash with Our and our well time the industry of fixed approximately of index escalations from escalations than rent. XXX more on the portfolio exceeding have straight-line based tenants price portfolio are increase have and feature XX% of on Over in our approximately other rate based annual rent, these XX leases. measures. is single due increases, representing X.X% X% no XX% industries leases is which with based

to XX% industrial XX% our portfolio. office focus X% our success At acquisitions in end industrial to the dispositions the the we As properties and portfolio, of grade of retail, quarter, selective of very end third non-core compared many our Across opportunities over office, years. of in expand in our to our XX% year distribution, attractive. million for of annual implied XXXX. as also increasingly uncertainty market several inflation spreads, a on Year-to-date, were a mentioned, completed the acquisition have X% criteria, rates retail and less industrial were investment comes made Contributing the sellers tenants. continue anticipation industrial distribution, relative and we tenant increased asking $XX.X at After straight-line concentration and rise, and composed and rent investment properties credit, to is we retail XX% to over continue active in of of The disconnect the or having of became XX% quarter XXXX, in the XXXX. grade last we in disciplined acquisitions. from third assets

our than has prudent disciplined consistent attractive million the lease with properties as we acquisitions the on pipeline XX comprised XXXX selectivity available were be beginning proven October with criteria, to be a Our our is much of average $XX cap remaining. at of property X.X% a we more acquisitions acquisition $XX our a with of the already as If at rate office at XX.X million the year. of have pipeline decide combined rate when for weighted CAP acquired, years close term properties would in the to

in during to third would to properties dispositions agreed and million. to We sell also under agreement closed additional sold the bring U.S. two one quarter property that have the total $XXX or terms over

in growing focused deliver strategy continues and to differentiated tenant on America North single dependable highly remain distribution Europe. value Our properties our and we and by acquiring investment portfolio industrial

successful from and that renewals remaining the own, eight investment the grade rent tenants mission Our where speak weighted the where of average derived and we XX% term nature over lease is of to lease expansions exceeds critical years. properties

for forward follow well-positioned future, remarks. are turn before Chris With I the more I'll look and with on the building I financial rest call the up that, the We some the to to year. detail to walk Chris? results in progress of for through over closing our

Thanks, Jim.

Using the a revenues per would $XX.X respectively, income $X.XX XXXX, same up $X.XX XXXX, been currency average second of applying $X.XX constant from million. monthly to AFFO and been for a would've and concept the $XX.X and million rates the currency grew third share, or revenues or quarter stockholders Core $XX.X quarter share. million, the revenue million per $X.XX million FFO $X.X X.X% attributable common or currency constant million have year-over-year, million of $XX.X with was million. AFFO net and third by basis, the up to $X.X year-over-year to million per FFO recorded On $X.X quarter share. were $XX.X million. to $XX.X by by For $XX.X we

to and relative is the impacted the the of by dollar AFFO U.S. strengthening pound. Our euro

currencies. the our these program turbulence of hedging the ongoing However, comprehensive impact reduce helped in

always, release. measures reconciliation income earnings to can found GAAP our of a As net non-GAAP in be

quarter sheet, balance a $X.X we net cash billion at $XXX of the cash equivalent. weighted interest million and of rate On of X.X% average the ended debt and with

X has to components weighted XXXX debt the end adjusted was EBITDA years. debt quarter $XXX XX-month quarter. of X.X debt notes, was include times the end place of our a average of was ratio $XXX.X the the with in debt. at net at the facility, The floating The Our of trailing fixed interest rate, maturity of billion X.X approximately million senior third multicurrency debt credit times. mortgage revolving XX% on well-cushioned interest gross swaps. debt inclusive coverage The of This is rate $X.X million in Company and outstanding which ratio rate

$XXX.X million share. to XXXX, per in liquidity XX, September of As was shareholders $XX.X common distributed in or Company dividends the $X.XX quarter million. approximately

value shares some Series value turn $XX.XX XX.X% B shares. that, XXXX the $XX.XX for closing price based preferred Our of to XX, call A is net for enterprise remarks. $X.X for with enterprise shares, on With I'll common $XX.XX Series debt September for the Jim closing billion to preferred share and back an of

forward Thanks, with cap of during including our have Chris. current activity ongoing pipeline the market in and I'm quarter, very leasing successful the accomplishments accretive third built the our we and expanding acquisitions rates. progress of pleased

balanced class in strong industry quality diversity. geographic grade with leases best features and portfolio classes Our and other investment high long-term and tenants, asset

of focus that, rate XXXX shareholders. throughout and debt interest primarily grow year. balance into comprehensive We the helped to are we portfolio believe we for and questions. next us for well Our line impact value to the strategies With for of foreign continue to shareholders recent can operator, minimize hedging enhance positioned creating on have open to and the and our earnings turbulence, exchange allowing fixed rate

our And questions Bryan the Maher Instructions] line [Operator first Securities. question. Reilly your of B. proceed with Please from with

afternoon, I share? revenues, on impact know but prepared comments. questions on And thanks Chris. currency quick and foreign gave that per maybe question. I it. But, from Jim And the AFFO I all the some a of guys Couple was two-part Good if for activity. front. had don't those you impact have you hedging the you gains Chris, the know, realize that what on guys

one. you kind hedges, Part costly more have you that's would part doing considered or consider So, is is, of that? and two how

Sure.

guess, million or with $X.X start on And to gains. a FX. I in in was realized that did but OpEx realized quarter quarter-over-quarter the were part There recorded $X.X primarily million for vacant million $X.X tenant, hedges, related gains the actual AFFO, actually of the Last some we had in that million. the on we by to about million $X.X FX. So, impact quarter, terms first decrease about terms the related we driven the have was mostly $X.X then, to of of

realized almost up $X the gains. were we million quarter-over-quarter in So,

In will the in net for hedging. that focus the had foreign increasing is be going And is, to consistent need terms strategy pretty and a convert. we flows we have we forward, the on actual the do what cash because bringing of currency that in hedging hedging door we

So, in evaluating, us consistently we have to trying our won't we did of have terms cost exposure. if out these And that's day any our compared do contracts. necessarily because to cash strategy door is of hedges. cash to flows, that We minimize want go terms we we out hedge of of increase risk. some beyond in But don't of moving one the percentage the really been to to forward little the put the cost, effectively very there

USD, locking We I that for the the us. out spot rates additional no converting in are into will in future like back door cash cash be said, and the going

is the I better maybe of divest the the assets both? two bit Thanks. or goal? non-core into that What of And think you’re goal X times But is that. you kind assets gave Okay. Is the then front, on metrics you and/or more performing disposition to kind And and against on a maybe debt-to-EBITDA. I color it said recycle of little us to parts. net deleverage know

Good voice. afternoon, to Good Bryan. your hear

will deem when we of ourselves all, we divest appropriate. it's properties of First

few where property had we a a offers was Germany three As profit property you tenant knew years a know, unsolicited divested we we the made out. in on the big it. and we And good moving ago on

are divesting a other of ourselves We few things.

We time we primarily will are assets, retail are of retail. definitely which the sellers non-core which to divest continue over assets,

the far the goes portfolio well. rest extremely all in performing as portfolio general, As of -- the and is

So, because properties are sell performing. there reasons we they sell not may property, behind We it. other if don't are a

Say For is the was example, there Bryan? funds if the continue it different property sort for to part us of the follow moving program that we we are your What into repurpose move as better a again. a new of we to lot sell buying think assets. And decide question, factors tenant ahead. and other of what out and to will to divest. it's But

level. leverage The

I be now. times Is at times? there that to than are meaningfully goal you X are you fine at lower or a X think

ultimately delever. Ultimately if be would and to the to no, the be, price easiest would ATM at to stock low to be level, price stock I the -- But was we with that stock is, a the decent way the like it on mean, down where mid-Xs. use into delever the some sell would to

acquisition always here cautious we is, with into goal down low So, with where very the a sticking our of to we inflation, recession, guns just getting being Xs. potential the now are and Right have we the economy but We have forward. are do where are attractive being pipeline, cautious. potential do sheet. balance deploy going how about We strong some a capital -- and acquisitions have very we in we

all on lease how Is me, or Great. And days? all? increases has at And tone you. that the from Thank any And you're the mean, dialogue of progressing there new for rate increasing leases, to renewals is for get? any state rent inflation? to given last the that I renewals, that's current there just pushback escalators, changed looking these thought the is me.

we're anywhere leases, much new X% upside. our a from and In looking Bryan. X% Thanks at to -- higher

had new we're we're and renew all thing, we from so we much on doing pushback on any escalators. the in leases, building leases, any same When larger not So, our far. of if this have tenants

our I forward our portfolio advantage in as I getting think, time. we're very locations But really the fortunate properties looking us quality and that the thank our because and of call. far renewals give the high on an stay them of as with you, for tenants of appreciate of Bryan. dealing to long periods

Thank you.

is question with Please proceed your Thalmann. James the next Ladenburg Our question. with line of from Allen Villard

inflation? forward? of picture. I portfolio European in seeing you are kind tenant just guess credit of that all about big Are impact your thinking the you in any terms kind cost how from of energy moving And health

have are our and investment one right we no Well, watch you now. that have credit of large committee we have a to watches our remember tenants the majority list grade, tenants’ that a and on

shape in they on they're pay rents Whirlpool, European Controls, all ING, Our and good time. tenants, their Johnson

So, as other But will affected this rents. basically I we concern mean, than so. far quality of the the I we fortunate a with in really we're we hurts energy portfolio very have everyone, a as collecting high lot see think, as people, less of be probably inflation. tenants our and don't

that Europe? is acquisitions affecting how I in Yes. guess, And I future guess

We're being very cautious.

out for very and right I of that capital, We've that like the we of as we're higher in seeing earlier, a far year, at the prices. unknowns rates, are today. there's said cap whole the stuff now. starting bunch to because But looking there in for we're cautious, As lot seeing decent are economy a we we're as deploying see been stuff I which said pipeline as

your of Our with next JMP with question questions. line is Securities. Mitch Germain from the Please proceed

Can you XXX. a the missed -- completed, breakdown amount you on two detail guess, gave a but additional. one versus sales? was sold have more I today, for a you of And what have the provided and might in I get think do sale? what's like of little it earlier right? you I breakdown was asset I And have what Do then

you handle can that? Chris,

Absolutely. Sure.

is a was million, that that that expect we that So, the $XX fourth in the sold and we property approximately million. actually close sale roughly million, next expect additional property a year. during small to in The And quarter, that's France. is $XX property on the property about was close property price to property vacant. the little over then, which quarter $X one is there a sale is that That was

a building you large The Mitch, office in is to color. And just France little give a building.

our will that reduce So office exposure.

next was That question. my

That'll exposure. office reduce our

buying you're But office. Great.

buying building government small in Belgium, one office office We're building, think. a I

lease. Government

Okay, good.

lease, long-term lease, Yes. credit. Government great

sense. Makes Okay.

got some million? due the What's You've coming year. the What plan plan $XXX for that? -- is debt next

that is debt. UK debt So our

we currently refinance that and onto properties pull credit to are option. as the but those We evaluating do ability an credit using our options, line facility our have the

decision make Mitch, But, on to the markets due middle not a our the and we today as So, don't we the till to because best the it's that's try closely, benefit have obviously can. will pricing pretty we next we debt watch to year. best find shareholders of coming

So, watching date, due very closer but to are a it’s the we it make we carefully. decision will little very, a

rate it, there some way point. that is there Is aware am at there, credit And but the in noticed facility, and wasn't the your average much I of not that a about is jumped know suspect because you to is I exposure multicurrency quarter-over-quarter, of? have hedging this a likelihood dramatically price a or I good I that of pretty change there think European

why of do there. rates hedge. is the because hedging have seeing pretty stay consistent the we some And of There that's reason you're part

Understood, okay.

hedging some out we of And the further. have extended

just I have but your how it, you somewhere probably read debt and variable, sure it no hedge? is pure much of I'm

XX% pulling just believe I it's number. I'm that the up. is about

That's consistent saw with then. what I

out And sense. makes here. me help Okay, Chris,

question. just bottom guess, around FX. not Was a or I'm it headwind a some tailwind? was it more one I understanding line the Just to your language of

It is a headwind.

because So, been. revenue numbers I than as would actual conversion the pound say euro USD it the lower to obviously pulled down their have previously was the weekend, and

Got you.

I guys. great. Okay, Thanks appreciate it.

Mitch. All Thanks, right.

your At to Nelson I'll for the remarks. Mr. back time, turn this floor closing

made with I we everybody have actually Company, a The very maintaining on very joining tenants pleased for operating we've built of company sheet. solidly. strong call. Well, we've portfolio have us a thank This portfolio, the we're to of leasing We're years. want balance gains last great and number today's the is in and great on very the proud over we

for bye. in listening So, you Bye, thank quarter. much today will calling you Thanks we in, talk everybody. and to very and next

conclude will This your for Thank participation. today's you conference.

You at may your time. this disconnect now lines