Global Net Lease Fourth Quarter 2020 Investor Presentation COMPANY HIGHLIGHTS 2 High-Quality, Mission Critical, Net Lease Focused Portfolio: High portfolio occupancy of 99.7% coupled with robust fourth quarter Cash Rent collection of 99%(1), highlighting strong overall operating performance 1 Differentiated Strategy with International Diversification: Portfolio of 237 properties in the U.S. and Canada complimented by 69 properties in Europe that are diversified across 130 tenants in 48 industries 2 Long-Ter ...

Global Net Lease Third Quarter 2020 Investor Presentation COMPANY HIGHLIGHTS 2 High-Quality, Mission Critical, Net Lease Focused Portfolio: High portfolio occupancy of 99.6% coupled with robust third quarter Cash Rent collection of 97%(1), highlighting strong overall operating performance 1 Differentiated Strategy with International Diversification: Portfolio of 231 properties in the U.S. and Canada complimented by 68 properties in Europe that are diversified across 127 tenants in 47 industries 2 Long-Term, ...

PART I - FINANCIAL INFORMATION The financial information section details the company's financial statements, management's discussion, market risk disclosures, and controls and procedures for the period ended September 30, 2020 [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended September 30, 2020, reflect an increase in total assets and liabilities, revenue growth driven by acquisitions, but a significant decrease in net income attributable to common stockholders [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show an increase in total assets and liabilities as of September 30, 2020, primarily due to real estate investments and new borrowings Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total real estate investments, net | $3,326,103 | $3,246,141 | | Cash and cash equivalents | $300,000 | $270,302 | | **Total Assets** | **$3,824,471** | **$3,701,605** | | Mortgage notes payable, net | $1,417,712 | $1,272,154 | | Revolving credit facility & Term loan, net | $681,081 | $596,964 | | **Total Liabilities** | **$2,242,572** | **$1,991,647** | | **Total Equity** | **$1,581,899** | **$1,709,958** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations indicate revenue growth for both the quarter and nine-month periods, but a notable decrease in net income attributable to common stockholders Key Operating Results (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | 9 Months 2020 | 9 Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenue from tenants | $82,711 | $77,942 | $243,062 | $229,529 | | Operating income | $26,003 | $24,556 | $74,117 | $79,787 | | Net income | $4,142 | $9,941 | $19,273 | $33,545 | | Net (loss) income to common stockholders | $(502) | $6,860 | $5,502 | $25,272 | | Net (loss) income per share (Basic & Diluted) | $(0.01) | $0.08 | $0.06 | $0.30 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows show increased cash from operations but a significant reduction in net cash provided by financing activities compared to the prior year Cash Flow Summary for the Nine Months Ended September 30 (in thousands) | Cash Flow Category | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $136,328 | $97,849 | | Net cash used in investing activities | $(178,398) | $(182,202) | | Net cash provided by financing activities | $69,449 | $296,073 | | **Net change in cash, cash equivalents and restricted cash** | **$27,379** | **$211,720** | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's property portfolio, accounting policies for COVID-19 related rent deferrals, real estate activities, and a stockholder rights plan - As of September 30, 2020, the Company owned **299 properties** totaling **34.7 million rentable square feet**, which were **99.6% leased** with a weighted-average remaining lease term of **8.7 years**. **63% of properties** are in the U.S. and Canada, and **37%** are in Europe[30](index=30&type=chunk) - In response to the COVID-19 pandemic, the company elected to use FASB and SEC relief, allowing it to account for COVID-related rent deferral agreements as if no changes were made to the original lease contracts, avoiding lease modification accounting where applicable[42](index=42&type=chunk) Real Estate Activity for the Nine Months Ended September 30 (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | **Acquisitions** | | | | Number of properties purchased | 21 | 20 | | Cash paid for acquisitions | $170,810 | $309,003 | | **Dispositions** | | | | Number of properties sold | 0 | 98 | | Proceeds from dispositions | $0 | $145,800 | | Gain on dispositions | $0 | $14,800 | - In April 2020, the company adopted a short-term stockholder rights plan (a "poison pill") to protect against hostile takeovers amidst market volatility from the COVID-19 pandemic. The plan is triggered if a person or group acquires **4.9% or more** of common stock without board approval and expires in April 2021[147](index=147&type=chunk)[149](index=149&type=chunk) - Subsequent to the quarter end, on November 5, 2020, the company acquired **four properties** in the United States for a total purchase price of approximately **$153.0 million**, funded with cash on hand[214](index=214&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's portfolio, the impact of COVID-19 on rent collection, revenue drivers, liquidity, and non-GAAP financial measures for the period [Overview and COVID-19 Impact](index=42&type=section&id=Overview%20and%20COVID-19%20Impact) This section provides an overview of the company's property portfolio and details management's response to and the impact of the COVID-19 pandemic on rent collection - As of September 30, 2020, the portfolio comprised **299 properties** (**47% industrial/distribution, 48% office, 5% retail**) with **34.7 million rentable square feet**, **99.6% leased**, and a weighted-average remaining lease term of **8.7 years**[222](index=222&type=chunk) - For the third quarter of 2020, the company collected approximately **97% of the original cash rent** due across the entire portfolio[226](index=226&type=chunk) Q3 2020 Cash Rent Collection Status | Status | United States | United Kingdom | Europe | Total Portfolio | | :--- | :--- | :--- | :--- | :--- | | Cash rent paid | 96% | 99% | 99% | 97% | | Approved deferral agreement | 1% | 1% | 1% | 1% | | Other/In Negotiation | 3% | 0% | 0% | 2% | [Results of Operations](index=49&type=section&id=Results%20of%20Operations) This section analyzes the drivers behind changes in revenue from tenants, interest expense, and the absence of gains from dispositions for the reporting periods - Revenue from tenants for Q3 2020 increased to **$82.7 million** from **$77.9 million** in Q3 2019, primarily driven by property acquisitions and favorable foreign exchange rate impacts[241](index=241&type=chunk) - Interest expense for Q3 2020 rose to **$18.7 million** from **$16.2 million** in Q3 2019, mainly due to an increase in average borrowings, with total debt outstanding increasing from **$1.9 billion** to **$2.1 billion** year-over-year[250](index=250&type=chunk) - For the nine months ended September 30, 2020, revenue from tenants increased to **$243.1 million** from **$229.5 million** in the prior year period, driven by acquisitions, while the gain on dispositions of real estate dropped from **$14.8 million** in 2019 to **zero** in 2020 as no properties were sold[259](index=259&type=chunk)[267](index=267&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's cash position, total debt, leverage ratio, and the board's decision to reduce common stock dividends - As of September 30, 2020, the company had **$300.0 million** in cash and cash equivalents. Key demands on cash include property acquisitions, debt service, and dividend payments[283](index=283&type=chunk) - Total debt outstanding was **$2.1 billion** as of September 30, 2020, with a weighted-average interest rate of **3.1%**. The company's debt leverage ratio was **57.3%** (total debt as a percentage of total purchase price of real estate investments)[292](index=292&type=chunk)[293](index=293&type=chunk) - In March 2020, the board of directors reduced the annualized dividend on common stock from **$2.13 per share** to **$1.60 per share**, effective in the second quarter of 2020[321](index=321&type=chunk) [Non-GAAP Financial Measures](index=57&type=section&id=Non-GAAP%20Financial%20Measures) This section presents key non-GAAP financial metrics, including FFO, Core FFO, and AFFO attributable to common stockholders for the reported periods Non-GAAP Performance Measures (in thousands) | Metric | Q3 2020 | Q3 2019 | 9 Months 2020 | 9 Months 2019 | | :--- | :--- | :--- | :--- | :--- | | FFO attributable to common stockholders | $34,547 | $37,878 | $108,221 | $110,862 | | Core FFO attributable to common stockholders | $34,622 | $38,633 | $108,918 | $113,491 | | AFFO attributable to common stockholders | $40,876 | $40,235 | $120,475 | $119,797 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposure during the nine months ended September 30, 2020, referencing its prior annual report - There has been **no material change** in the company's exposure to market risk during the nine months ended September 30, 2020[335](index=335&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The company's disclosure controls and procedures were determined to be **effective** as of the end of the period covered by the report[336](index=336&type=chunk) - There were **no changes in internal control** over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[337](index=337&type=chunk) PART II - OTHER INFORMATION This section covers legal proceedings, updated risk factors, unregistered sales of equity securities, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) The company confirms the absence of any material legal proceedings pending or contemplated against it - The company reported **no legal proceedings**[338](index=338&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) The company updated its risk factors to include an expanded discussion on the COVID-19 pandemic's potential adverse impacts, alongside existing risks like tenant dependence and interest rate fluctuations - The company is subject to significant risks from the COVID-19 pandemic, which could negatively impact tenants' ability to pay rent, reduce demand for real estate, and disrupt global financial markets, potentially affecting the company's financial condition and ability to pay dividends[341](index=341&type=chunk)[343](index=343&type=chunk)[348](index=348&type=chunk) - A summary of principal risk factors was provided, including conflicts of interest with the Advisor, dependence on tenant financial health, interest rate risk, adverse foreign exchange rate changes, and risks associated with international investments and political instability[340](index=340&type=chunk) - The company's bylaws designate the Circuit Court for Baltimore City, Maryland, as the sole and exclusive forum for certain stockholder actions, which may limit a stockholder's ability to bring a claim in a different judicial forum[352](index=352&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20of%20Registered%20Securities) The company reported no unregistered sales of equity securities or repurchases of its own equity during the reporting period - There were **no sales of unregistered securities** or **repurchases of equity securities** by the company during the reporting period[353](index=353&type=chunk) [Other Items (Defaults, Mine Safety, Other Info, Exhibits)](index=66&type=section&id=Other%20Items) The company reported no defaults upon senior securities, stated that mine safety disclosures are not applicable, had no other information to report, and provided a list of exhibits filed with the report - The company reported **no defaults** upon senior securities (Item 3), **no mine safety disclosures** (Item 4), and **no other material information** (Item 5)[354](index=354&type=chunk)

Financial Data and Key Metrics Changes - For Q3 2020, adjusted EBITDA was $63.6 million, up from $58.3 million in Q3 2019 [20] - Revenue increased by 6.1% to $82.7 million from $77.9 million, with a net loss attributable to common stockholders of $0.5 million [20] - AFFO per share rose 4.5% to $0.46 from $0.44 in the previous quarter [14] Business Line Data and Key Metrics Changes - The portfolio is nearly fully occupied at 99.6% leased, with a weighted average remaining lease term of 8.7 years, up from 8 years a year ago [15] - The property mix is currently 48% office, 47% industrial and distribution, and 5% retail, compared to 52% office, 43% industrial and distribution, and 5% retail a year ago [16] - Over 65% of straight-line rent comes from investment grade or implied investment grade tenants [17] Market Data and Key Metrics Changes - Rent collection was strong, with over 97% of original cash rent collected, including 99% from top 20 tenants [8][10] - In the U.S., 96% of cash rent was collected, while 99% was collected from UK-based assets and other European tenants [10] Company Strategy and Development Direction - The company is focused on industrial and distribution assets, with a robust acquisition pipeline totaling over $325 million [12][27] - The strategy includes opportunistic selling of retail holdings, with a focus on long-term core holdings [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience during the pandemic, with a strong emphasis on credit quality and asset selection [9][26] - The company is positioned for long-term growth, with no near-term debt maturities and ample liquidity to pursue accretive opportunities [27] Other Important Information - The company distributed $35.8 million in common dividends to shareholders in the quarter, or $0.40 per share [20] - The net debt to enterprise value ratio was 51.8%, with net debt of $1.8 billion at a weighted average interest rate of 3.1% [21][23] Q&A Session Summary Question: Impact of COVID-19 on European assets - Management noted that there have not been significant changes in the portfolio despite the uptick in COVID-19 cases in Europe [31] Question: Johnson Controls acquisition sourcing and future deals - The acquisition was sourced through normal channels, and management is seeing more deals in Europe and a robust pipeline in the U.S. [32] Question: Common denominator for tenants with rent deferral issues - Management indicated that there has not been a specific area of concern among tenants regarding rent deferrals [34] Question: General and Administrative expenses - G&A expenses were higher in Q3 due to legal costs related to COVID-19, but are expected to normalize [35] Question: Dividend payout ratio and future plans - Management is comfortable with the current dividend payout ratio and has no plans to raise the dividend at this time [37] Question: Cap rates for acquisition opportunities - Management indicated that cap rates for acquisitions are generally in the range of 6.5% to 7.5% [42] Question: European lockdowns and investment opportunities - Management believes that while the process may slow down, it will not significantly impact deal volumes [44] Question: Changes in underwriting for office acquisitions - Management has maintained a focus on mission-critical office properties and will continue to apply stringent criteria for future acquisitions [52]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited consolidated financial statements and accompanying notes for the specified periods [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets and liabilities grew while total equity decreased, driven by real estate investments and borrowings Key Balance Sheet Metrics | Metric | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $3,792,992 | $3,701,605 | | Total Liabilities | $2,181,437 | $1,991,647 | | Total Equity | $1,611,555 | $1,709,958 | - Real estate investments, net, increased from **$3,246,141 thousand** as of December 31, 2019, to **$3,293,349 thousand** as of June 30, 2020, reflecting ongoing investment activities[8](index=8&type=chunk) - Cash and cash equivalents increased from **$270,302 thousand** to **$316,824 thousand**, indicating improved liquidity[8](index=8&type=chunk) - Mortgage notes payable, net, and revolving credit facility balances increased, contributing to the **rise in total liabilities**[8](index=8&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net income declined significantly despite revenue growth, driven by higher expenses and losses on dispositions Key Operational Metrics | Metric (in thousands) | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue from tenants | $81,109 | $76,119 | $160,351 | $151,587 | | Total expenses | $56,651 | $51,889 | $112,084 | $104,171 | | Operating income | $24,305 | $31,153 | $48,114 | $55,231 | | Net income attributable to common stockholders | $966 | $12,621 | $6,004 | $18,412 | | Basic and diluted net income per share | $0.01 | $0.15 | $0.06 | $0.22 | - Revenue from tenants increased by **6.6%** for the three months and **5.8%** for the six months ended June 30, 2020, primarily due to property acquisitions[12](index=12&type=chunk) - Interest expense increased to **$17,529 thousand** for the three months and **$33,969 thousand** for the six months ended June 30, 2020, reflecting higher average borrowings[12](index=12&type=chunk) - The company recorded a **loss of $153 thousand** on dispositions of real estate investments in 2020, contrasting with **gains of over $6.9 million** in the respective 2019 periods[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company shifted from comprehensive income to a comprehensive loss due to adverse currency and derivative adjustments Comprehensive Income (Loss) Summary | Metric (in thousands) | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $5,530 | $15,328 | $15,131 | $23,604 | | Other comprehensive loss | $(5,914) | $(4,196) | $(25,616) | $(10,460) | | Comprehensive income (loss) | $(384) | $11,132 | $(10,485) | $13,144 | | Comprehensive income (loss) attributable to common stockholders | $(4,948) | $8,425 | $(19,612) | $7,952 | - Cumulative translation adjustment resulted in a **loss of $15,077 thousand** for the six months ended June 30, 2020, indicating adverse foreign currency movements[15](index=15&type=chunk) - Fair value adjustments for designated derivatives contributed a **loss of $10,539 thousand** for the six months ended June 30, 2020[15](index=15&type=chunk) [Consolidated Statements of Changes in Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased due to accumulated other comprehensive loss and an increased accumulated deficit Equity Position | Metric (in thousands) | December 31, 2019 | June 30, 2020 | | :------------------------------------ | :---------------- | :------------ | | Total Stockholders' Equity | $1,697,631 | $1,594,511 | | Total Equity | $1,709,958 | $1,611,555 | - Accumulated other comprehensive income shifted from a **gain of $20,195 thousand** to a **loss of $(5,421) thousand**[18](index=18&type=chunk)[19](index=19&type=chunk) - Accumulated deficit increased to **$(810,923) thousand** as of June 30, 2020, from **$(733,245) thousand** as of December 31, 2019[18](index=18&type=chunk)[19](index=19&type=chunk) - Common stock dividends declared for the six months ended June 30, 2020, totaled **$83,448 thousand**[18](index=18&type=chunk)[22](index=22&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased, while investing activities remained a significant use of cash and financing cash flow decreased Cash Flow Summary | Metric (in thousands) | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $89,714 | $71,244 | | Net cash used in investing activities | $(147,051) | $(135,491) | | Net cash provided by financing activities | $103,412 | $153,144 | | Net change in cash, cash equivalents and restricted cash | $46,075 | $88,897 | - Operating cash flow increased by **$18.5 million**, driven by adjustments to net income for non-cash items[25](index=25&type=chunk) - Investment in real estate and related assets was **$144,689 thousand** for the six months ended June 30, 2020[25](index=25&type=chunk) - Borrowings under revolving credit facilities increased to **$227,000 thousand** in 2020 from **$116,000 thousand** in 2019[25](index=25&type=chunk) [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's financial position, operations, and key accounting policies, including COVID-19 impacts [Note 1 — Organization](index=14&type=section&id=Note%201%20%E2%80%94%20Organization) The company is a REIT investing in a diversified portfolio of commercial properties in the U.S., Canada, and Europe - Global Net Lease, Inc. is a Maryland corporation that elected REIT status for U.S. federal income tax purposes starting December 31, 2013[31](index=31&type=chunk) - The company's common and preferred stocks are listed on the NYSE under symbols **GNL**, **GNL PR A**, and **GNL PR B**[31](index=31&type=chunk) Portfolio Overview | Metric | Value as of June 30, 2020 | | :------------------------------------ | :------------------------ | | Number of properties | 296 | | Rentable square feet | 34.6 million | | Occupancy rate | 99.6% | | Weighted-average remaining lease term | 8.9 years | | Geographic concentration (annualized rental income): | | | U.S. and Canada | 65% | | Europe | 35% | [Note 2 — Summary of Significant Accounting Policies](index=14&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines key accounting principles, including the impact of COVID-19 on lease accounting - The company prepares its unaudited consolidated financial statements in accordance with **GAAP** for interim financial information[34](index=34&type=chunk) - Revenue from tenants is recognized on a **straight-line basis** over the initial lease term[39](index=39&type=chunk) - The company evaluated goodwill for impairment due to COVID-19 and determined **no impairment** as of March 31, 2020[59](index=59&type=chunk) - The company elected to use FASB/SEC relief for COVID-19 related lease amendments, treating them as **pre-concession arrangements**[77](index=77&type=chunk)[81](index=81&type=chunk) - ASU 2020-04 (Reference Rate Reform) was adopted in Q1 2020 to apply **hedge accounting expedients** for LIBOR-indexed cash flows[85](index=85&type=chunk) [Note 3 — Real Estate Investments, Net](index=23&type=section&id=Note%203%20%E2%80%94%20Real%20Estate%20Investments%2C%20Net) The company acquired 18 properties in the first half of 2020 and had no dispositions during the period Acquisition Activity | Metric (in thousands) | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Cash paid for acquired real estate investments | $144,689 | $210,991 | | Number of properties purchased | 18 | 11 | - During the three and six months ended June 30, 2020, the company **did not sell any properties**[91](index=91&type=chunk) - For the six months ended June 30, 2019, the company sold 64 properties for **$92.8 million**, resulting in a **gain of $7.8 million**[93](index=93&type=chunk) - No tenants represented **10.0% or greater** of consolidated annualized rental income, indicating tenant diversification[97](index=97&type=chunk) Geographic Concentration | Geographic Concentration | June 30, 2020 | December 31, 2019 | | :----------------------- | :------------ | :---------------- | | United States | 63.4% | 63.0% | | Michigan | 14.2% | 14.6% | | United Kingdom | 16.6% | 18.2% | [Note 4 —Mortgage Notes Payable, Net](index=25&type=section&id=Note%204%20%E2%80%94Mortgage%20Notes%20Payable%2C%20Net) Mortgage notes payable increased to $1.303 billion due to new financings, with a stable interest rate Mortgage Debt Summary | Metric (in thousands) | June 30, 2020 | December 31, 2019 | | :------------------------------------ | :------------ | :---------------- | | Gross mortgage notes payable | $1,319,173 | $1,287,448 | | Mortgage notes payable, net | $1,303,161 | $1,272,154 | | Weighted-average interest rate | 3.4% | 3.4% | - On May 14, 2020, the company secured a new **€70.0 million ($75.6 million) loan** in France, maturing May 14, 2025[110](index=110&type=chunk) - The French refinancing proceeds were used to repay outstanding indebtedness and reduce the **Revolving Credit Facility**[110](index=110&type=chunk) - The company was in **compliance with all financial covenants** under its mortgage notes payable agreements as of June 30, 2020[108](index=108&type=chunk) Future Principal Payments | Future Principal Payments (in thousands) | Amount | | :--------------------------------------- | :----- | | 2020 (remainder) | $2,609 | | 2021 | $12,772 | | 2022 | $19,779 | | 2023 | $316,985 | | 2024 | $217,842 | | Thereafter | $749,186 | | Total | $1,319,173 | [Note 5 — Credit Facilities](index=27&type=section&id=Note%205%20%E2%80%94%20Credit%20Facilities) Total outstanding balances under the Credit Facility increased to $743.5 million as of June 30, 2020 Credit Facility Balances | Metric (in thousands) | June 30, 2020 | December 31, 2019 | | :------------------------------------ | :------------ | :---------------- | | Revolving Credit Facility | $344,592 | $199,071 | | Term Loan, Net | $398,955 | $397,893 | | Total Credit Facility | $743,547 | $596,964 | - The Credit Facility's total commitments increased to **$1.235 billion**, with potential for an additional **$515.0 million**[121](index=121&type=chunk) - The Revolving Credit Facility matures on **August 1, 2023**, and the Term Loan matures on **August 1, 2024**[122](index=122&type=chunk) - As of June 30, 2020, approximately **$14.2 million** was available for future borrowings under the Revolving Credit Facility[125](index=125&type=chunk) - The Credit Facility imposes financial covenants, including restrictions on distributions to **100% of Adjusted FFO**[127](index=127&type=chunk)[129](index=129&type=chunk) [Note 6 — Fair Value of Financial Instruments](index=29&type=section&id=Note%206%20%E2%80%94%20Fair%20Value%20of%20Financial%20Instruments) Derivatives are classified as Level 2, while the fair value of mortgage notes payable is classified as Level 3 - The company uses a **three-level fair value hierarchy** to classify inputs used in fair value measurements[132](index=132&type=chunk)[134](index=134&type=chunk) - The fair value of the company's mortgage notes payable was **$1.4 billion** as of June 30, 2020, classified as **Level 3**[139](index=139&type=chunk) - Credit valuation adjustments for derivatives are not significant, leading to an overall **Level 2 classification** for derivative valuations[134](index=134&type=chunk) Derivative Fair Values | Derivative Type (in thousands) | June 30, 2020 (Level 2) | December 31, 2019 (Level 2) | | :----------------------------- | :---------------------- | :-------------------------- | | Foreign currency forwards, net | $3,485 | $2,726 | | Interest rate swaps, net | $(16,987) | $(6,082) | [Note 7 — Derivatives and Hedging Activities](index=30&type=section&id=Note%207%20%E2%80%94%20Derivatives%20and%20Hedging%20Activities) The company uses derivatives to manage interest rate and foreign exchange risks, with a net liability position - The company uses interest rate swaps to hedge variable-rate debt and foreign currency derivatives to manage **GBP-USD and EUR-USD** exposure[140](index=140&type=chunk) - For the three and six months ended June 30, 2020, the company recorded a **loss of $0.3 million** and a **gain of $2.8 million**, respectively, on non-designated derivatives[155](index=155&type=chunk) - The company terminated two interest rate swaps with an aggregate notional amount of **€14.5 million** in Q2 2020[147](index=147&type=chunk) - An estimated **$6.7 million** will be reclassified from AOCI as an increase to interest expense over the next 12 months[145](index=145&type=chunk) Derivative Positions | Derivative Type (in thousands) | June 30, 2020 | December 31, 2019 | | :------------------------------------ | :------------ | :---------------- | | Derivatives designated as hedging instruments (net) | $(16,987) | $(6,008) | | Derivatives not designated as hedging instruments (net) | $3,485 | $2,652 | [Note 8 — Stockholders' Equity](index=34&type=section&id=Note%208%20%E2%80%94%20Stockholders'%20Equity) The company reduced its common stock dividend and adopted a short-term stockholder rights plan Shares Outstanding | Stock Type | Shares Outstanding (June 30, 2020) | | :------------------------------------ | :--------------------------------- | | Common Stock | 89,482,576 | | 7.25% Series A Preferred Stock | 6,799,467 | | 6.875% Series B Preferred Stock | 3,450,000 | - The company did not sell any shares through its **ATM Programs** during the first half of 2020[163](index=163&type=chunk)[166](index=166&type=chunk) - Common stock dividends were reduced from an annualized rate of **$2.13 per share** to **$1.60 per share**, effective Q2 2020[167](index=167&type=chunk)[169](index=169&type=chunk) - A short-term stockholder rights plan was adopted in April 2020 to deter hostile takeovers by entities acquiring **4.9% or more** of common stock[173](index=173&type=chunk) [Note 9 — Commitments and Contingencies](index=36&type=section&id=Note%209%20%E2%80%94%20Commitments%20and%20Contingencies) Commitments primarily consist of ground leases, with no material legal or environmental claims reported - The company leases land under ground leases for eight properties, with lease durations ranging from **16 to 85 years**[174](index=174&type=chunk) - No material legal or regulatory proceedings are pending or contemplated against the company[180](index=180&type=chunk) Operating Lease Metrics | Metric (in thousands) | June 30, 2020 | | :------------------------------------ | :------------ | | Operating lease right-of-use asset | $49,450 | | Operating lease liability | $23,649 | | Weighted-average remaining lease term | 32.5 years | | Weighted-average discount rate | 4.33% | Future Lease Payments | Future Base Rent Payments (in thousands) | Amount | | :--------------------------------------- | :----- | | 2020 (remainder) | $680 | | 2021 | $1,359 | | 2022 | $1,359 | | 2023 | $1,359 | | 2024 | $1,364 | | Thereafter | $39,451 | | Total minimum lease payments | $45,572 | | Total present value of lease payments | $23,649 | [Note 10 — Related Party Transactions](index=37&type=section&id=Note%2010%20%E2%80%94%20Related%20Party%20Transactions) The company has significant transactions with its Advisor and Property Manager, both affiliates of AR Global - The Advisor and Property Manager are under common control with **AR Global** and receive compensation for services[32](index=32&type=chunk) - The Advisory Agreement was amended in May 2020 to temporarily lower **Core AFFO Per Share thresholds** for Incentive Compensation due to COVID-19[188](index=188&type=chunk)[190](index=190&type=chunk) - **No Incentive Compensation** was earned for the quarters or six months ended June 30, 2020 or 2019[190](index=190&type=chunk)[204](index=204&type=chunk) Related Party Fees | Fee Type (in thousands) | Three Months Ended June 30, 2020 (Incurred) | Three Months Ended June 30, 2019 (Incurred) | Six Months Ended June 30, 2020 (Incurred) | Six Months Ended June 30, 2019 (Incurred) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Asset management fees | $7,376 | $6,694 | $14,753 | $13,365 | | Property management fees | $1,498 | $1,468 | $2,915 | $2,840 | | Incentive compensation | $0 | $0 | $0 | $0 | | Total related party operational fees and reimbursements | $8,874 | $8,162 | $17,668 | $16,205 | [Note 11 — Economic Dependency](index=41&type=section&id=Note%2011%20%E2%80%94%20Economic%20Dependency) The company is economically dependent on its Advisor and its affiliates for essential management and administrative services - The company relies on the Advisor and its affiliates for critical services such as **asset management, property management, and asset acquisition**[207](index=207&type=chunk) - This dependency means the company would need to find alternative providers if the Advisor were unable to continue providing these services[208](index=208&type=chunk) [Note 12 — Equity-Based Compensation](index=41&type=section&id=Note%2012%20%E2%80%94%20Equity-Based%20Compensation) This note details equity compensation plans, including RSUs for directors and a performance agreement with the Advisor - **No stock options** were issued under the Stock Option Plan as of June 30, 2020[212](index=212&type=chunk) - The RSP allows for grants of Restricted Shares and RSUs, with independent director retainers payable **50% in cash and 50% in RSUs**[213](index=213&type=chunk)[214](index=214&type=chunk) - The 2018 OPP, with a total fair value of **$18.8 million**, is expensed over a 2.8-year service period[221](index=221&type=chunk) RSU Activity | RSU Activity | Number of RSUs (June 30, 2020) | Weighted-Average Issue Price (June 30, 2020) | | :------------------------------------ | :----------------------------- | :------------------------------------------- | | Unvested, December 31, 2019 | 40,541 | $20.47 | | Vested | (23,824) | $21.71 | | Granted | 28,232 | $13.37 | | Unvested, June 30, 2020 | 44,949 | $15.35 | Compensation Expense | Compensation Expense (in thousands) | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | | :---------------------------------- | :------------------------------- | :----------------------------- | | 2018 OPP | $2,400 | $4,700 | | RSUs | $200 | $300 | [Note 13 — Earnings Per Share](index=46&type=section&id=Note%2013%20%E2%80%94%20Earnings%20Per%20Share) Net income per share decreased significantly, calculated using the two-class method for participating securities EPS Calculation | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders | $966 | $12,621 | $6,004 | $18,412 | | Basic and diluted net income per share | $0.01 | $0.15 | $0.06 | $0.22 | | Weighted average common shares outstanding (Basic) | 89,470,114 | 83,847,120 | 89,464,433 | 82,667,421 | | Weighted average common shares outstanding (Diluted) | 90,102,709 | 85,165,549 | 90,097,029 | 83,985,850 | - The **two-class method** is applied because unvested RSUs and unearned LTIP Units contain non-forfeitable rights to distributions[236](index=236&type=chunk) Excluded Common Share Equivalents | Common Share Equivalents Excluded from EPS Calculation | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | | :----------------------------------------------------- | :------------------------------- | :----------------------------- | | LTIP Units | 1,967,296 | 1,967,296 | [Note 14 — Subsequent Events](index=47&type=section&id=Note%2014%20%E2%80%94%20Subsequent%20Events) Subsequent to quarter-end, the company secured a new $88.0 million loan to repay its Revolving Credit Facility - On July 10, 2020, the company borrowed **$88.0 million** through a new loan agreement, secured by six industrial properties[241](index=241&type=chunk) - Approximately **$84.0 million** of the new loan proceeds were used to repay amounts outstanding under the Revolving Credit Facility[241](index=241&type=chunk) - The new loan bears interest at a floating rate of one-month LIBOR plus 2.9%, fixed at **3.45%** by a swap agreement, and matures on July 10, 2027[241](index=241&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, liquidity, and the impacts of the COVID-19 pandemic [Overview](index=51&type=section&id=Overview) The company is an externally managed REIT focused on a diversified portfolio of single-tenant net-leased commercial properties - The company invests in commercial properties with an emphasis on **sale-leaseback transactions** and mission-critical single tenant net-leased properties[250](index=250&type=chunk) Portfolio Summary | Metric | Value as of June 30, 2020 | | :------------------------------------ | :------------------------ | | Number of properties | 296 | | Rentable square feet | 34.6 million | | Occupancy rate | 99.6% | | Weighted-average remaining lease term | 8.9 years | | Geographic concentration (annualized rental income): | | | U.S. and Canada | 65% | | Europe | 35% | | Portfolio composition: | | | Industrial/distribution | 47% | | Office | 48% | | Retail | 5% | [Management Update on the Impacts of the COVID-19 Pandemic](index=51&type=section&id=Management%20Update%20on%20the%20Impacts%20of%20the%20COVID-19%20Pandemic) Management took proactive steps to mitigate pandemic risks, achieving high rent collection and enhancing liquidity - The COVID-19 pandemic poses risks to rent payments, real estate demand, capital markets, and **debt covenant compliance**[252](index=252&type=chunk)[254](index=254&type=chunk) - Management engaged directly with tenants, achieving approximately **98% cash rent collection** for Q2 2020 across the portfolio[256](index=256&type=chunk) - A dividend reduction, effective Q2 2020, is expected to reduce cash needed for dividend payments by approximately **$48.0 million per year**[261](index=261&type=chunk) Rent Collection Status | Second Quarter 2020 Cash Rent Status | United States (1) | United Kingdom | Europe | Total Portfolio | | :----------------------------------- | :---------------- | :------------- | :----- | :-------------- | | Cash rent paid | 96% | 99% | 100% | 98% | | Approved deferral agreement | 2% | 1% | —% | 2% | | Deferral in negotiation | 1% | —% | —% | —% | | Other | 1% | —% | —% | —% | [Properties](index=53&type=section&id=Properties) The company's portfolio comprises 296 commercial properties with a weighted-average remaining lease term of 8.9 years - The company's portfolio includes 296 properties with a total of **34,558 thousand square feet** and a weighted-average remaining lease term of **8.9 years**[270](index=270&type=chunk) - Recent acquisitions in 2019 and 2020 include properties leased to **Whirlpool, FedEx, and NSA Industries**[270](index=270&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Net income decreased significantly due to higher expenses and a loss on dispositions, despite revenue growth from acquisitions [Comparison of the Three Months Ended June 30, 2020 and 2019](index=59&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202020%20and%202019) Net income attributable to common stockholders fell to $1.0 million from $12.6 million in the prior-year period Quarterly Performance Summary | Metric (in thousands) | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change (YoY) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------- | | Net income attributable to common stockholders | $966 | $12,621 | $(11,655) | | Revenue from tenants | $81,109 | $76,119 | $4,990 | | Gain (loss) on dispositions of real estate investments | $(153) | $6,923 | $(7,076) | | Interest expense | $(17,529) | $(15,689) | $(1,840) | | (Loss) gain on derivative instruments | $(317) | $1,390 | $(1,707) | - The increase in revenue was primarily due to **property acquisitions**, partially offset by adverse foreign exchange rate impacts[275](index=275&type=chunk) - Average borrowings increased, leading to higher interest expense, with total debt outstanding rising from **$1.8 billion** to **$2.0 billion**[284](index=284&type=chunk) [Comparison of the Six Months Ended June 30, 2020 and 2019](index=61&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202020%20and%202019) Net income attributable to common stockholders fell to $6.0 million from $18.4 million in the prior-year period Semi-Annual Performance Summary | Metric (in thousands) | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | Change (YoY) | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------- | | Net income attributable to common stockholders | $6,004 | $18,412 | $(12,408) | | Revenue from tenants | $160,351 | $151,587 | $8,764 | | Gain (loss) on dispositions of real estate investments | $(153) | $7,815 | $(7,968) | | Interest expense | $(33,969) | $(30,851) | $(3,118) | | (Loss) gain on derivative instruments | $2,826 | $1,630 | $1,196 | - Revenue growth was primarily due to **property acquisitions**, partially offset by adverse foreign exchange rate impacts[292](index=292&type=chunk) - The weighted-average effective interest rate on total debt increased from **3.0%** to **3.2%**[302](index=302&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained liquidity through cash from operations and borrowings, ending the period with $316.8 million in cash - Cash and cash equivalents were **$316.8 million** as of June 30, 2020, up from **$270.3 million** at December 31, 2019[317](index=317&type=chunk) - The company acquired 18 properties for **$144.7 million** during the six months ended June 30, 2020[320](index=320&type=chunk) - Total debt outstanding was **$2.1 billion** as of June 30, 2020, with **86.6%** of debt being fixed-rate or swapped to fixed-rate[327](index=327&type=chunk) - Subsequent to June 30, 2020, an **$88.0 million loan** was secured, primarily used to repay the Revolving Credit Facility[331](index=331&type=chunk) - The company was in **compliance with all covenants** under its Credit Facility and mortgage notes payable agreements as of June 30, 2020[340](index=340&type=chunk) [Non-GAAP Financial Measures](index=69&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP measures like FFO and AFFO to evaluate operating performance - **FFO, Core FFO, and AFFO** are non-GAAP measures used to assess operating performance, excluding items like real estate depreciation[341](index=341&type=chunk)[343](index=343&type=chunk)[346](index=346&type=chunk) - **Core FFO** excludes acquisition, transaction, and other non-core costs, as well as debt extinguishment costs[348](index=348&type=chunk) - **AFFO** further excludes unrealized gains/losses and non-cash items like straight-line rent and equity-based compensation[349](index=349&type=chunk) - Rent deferrals due to COVID-19 have not significantly impacted rental revenue for GAAP Net Income and NAREIT FFO calculations[351](index=351&type=chunk) Non-GAAP Reconciliation Summary | Metric (in thousands) | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | | :------------------------------------ | :------------------------------- | :----------------------------- | | FFO attributable to common stockholders | $35,103 | $73,674 | | Core FFO attributable to common stockholders | $35,445 | $74,296 | | AFFO attributable to common stockholders | $39,777 | $79,599 | [Dividends](index=72&type=section&id=Dividends) The company reduced its common stock dividend effective Q2 2020, subject to restrictions under its Credit Facility - Common stock dividends were reduced to an annualized rate of **$1.60 per share** ($0.40 quarterly), effective Q2 2020[356](index=356&type=chunk) - Series A and Series B Preferred Stock dividends accrue at **7.25%** and **6.875%** annually, respectively[358](index=358&type=chunk) - The Credit Facility restricts distributions to **100% of Adjusted FFO** (105% for one fiscal quarter per year)[359](index=359&type=chunk) Dividend Coverage | Source of Dividend Coverage (in thousands) | Six Months Ended June 30, 2020 | | :----------------------------------------- | :----------------------------- | | Total dividends and distributions | $91,878 | | Cash flows provided by operations | $89,714 (97.6%) | | Available cash on hand | $2,164 (2.4%) | [Foreign Currency Translation](index=74&type=section&id=Foreign%20Currency%20Translation) The company manages foreign currency risk through currency matching and the use of derivative instruments - The company's reporting currency is **USD**, while foreign investments use local functional currencies[363](index=363&type=chunk) - Foreign currency exchange rate fluctuations impact property investments, rental income, expenses, and debt instruments[363](index=363&type=chunk) - Risk is managed by matching debt service obligations to tenant rental obligations and using **foreign currency derivatives**[363](index=363&type=chunk) [Contractual Obligations](index=74&type=section&id=Contractual%20Obligations) There were no material changes to the company's contractual obligations compared to the 2019 Annual Report - No material changes in contractual obligations were reported as of June 30, 2020, compared to the **2019 Annual Report on Form 10-K**[364](index=364&type=chunk) [Election as a REIT](index=74&type=section&id=Election%20as%20a%20REIT) The company intends to maintain its REIT status, which requires distributing at least 90% of its taxable income - The company elected REIT taxation status effective **December 31, 2013**, and aims to maintain it[365](index=365&type=chunk) - REIT qualification requires annual distribution of at least **90% of REIT taxable income**[365](index=365&type=chunk) - While generally exempt from federal corporate income tax, the company may be subject to **state, local, and foreign taxes**[365](index=365&type=chunk)[368](index=368&type=chunk) [Inflation](index=76&type=section&id=Inflation) Inflation may adversely impact results, particularly for leases without indexed escalation provisions - Inflation may adversely impact the company, especially for leases lacking **indexed escalation provisions**[369](index=369&type=chunk) - Rising maintenance and operating costs due to inflation could **negatively affect results of operations**[369](index=369&type=chunk) [Related-Party Transactions and Agreements](index=76&type=section&id=Related-Party%20Transactions%20and%20Agreements) Details on related party transactions with the company's Advisor and affiliates are provided in Note 10 - Details on related party transactions, agreements, and fees are provided in **Note 10** to the consolidated financial statements[370](index=370&type=chunk) [Off-Balance Sheet Arrangements](index=76&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no material off-balance sheet arrangements - The company has **no material off-balance sheet arrangements**[371](index=371&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=76&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There has been no material change in the company's market risk exposure during the first half of 2020 - No material change in market risk exposure occurred during the six months ended June 30, 2020[372](index=372&type=chunk) [Item 4. Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed **effective** as of June 30, 2020[373](index=373&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended June 30, 2020[374](index=374&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=77&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - No legal proceedings are pending[376](index=376&type=chunk) [Item 1A. Risk Factors](index=77&type=section&id=Item%201A.%20Risk%20Factors) The primary material change to risk factors is the significant and evolving impact of the global COVID-19 pandemic - The **COVID-19 pandemic** has caused severe disruptions in the global economy and financial markets, leading to adverse effects on the company and its tenants[377](index=377&type=chunk) - Risks include tenants' inability to pay rent, potential decline in demand for office space, capital market volatility, and challenges in **refinancing debt**[378](index=378&type=chunk)[386](index=386&type=chunk) - The company collected approximately **98% of Q2 2020 cash rent**, but future collection is uncertain[382](index=382&type=chunk) - Operational risks include difficulty accessing capital, potential asset value decreases, and challenges in complying with **REIT requirements**[386](index=386&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities](index=80&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20of%20Registered%20Securities) There were no unregistered sales or issuer repurchases of equity securities - No unregistered sales of securities occurred[389](index=389&type=chunk) - No repurchases of equity securities by the issuer were made[390](index=390&type=chunk) [Item 3. Defaults Upon Senior Securities](index=80&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[391](index=391&type=chunk) [Item 4. Mine Safety Disclosures](index=80&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are **not applicable**[392](index=392&type=chunk) [Item 5. Other Information](index=80&type=section&id=Item%205.%20Other%20Information) The company reported no other information - No other information was reported[393](index=393&type=chunk) [Item 6. Exhibits](index=80&type=section&id=Item%206.%20Exhibits) This section lists all exhibits included or incorporated by reference in the quarterly report - The report includes various exhibits, such as **Articles of Restatement, Bylaws, and Rights Agreement**[401](index=401&type=chunk) - Certifications from the **Principal Executive Officer and Principal Financial Officer** are also included[401](index=401&type=chunk)

Global Net Lease Second Quarter 2020 Investor Presentation OVERVIEW 2 High-Quality, Mission Critical, Net Lease Focused Portfolio Long Duration Leases to Primarily Investment Grade Rated Tenants(1) Differentiated Strategy with International Diversification Strenuous Due Diligence and Underwriting Standards Proactive Asset Management Program to Drive Long Term Portfolio Value Experienced Management Team 1. As used herein, investment grade includes both actual investment grade ratings of the tenant or guarant ...

Financial Data and Key Metrics Changes - Total revenue increased by 6.6% to $81.1 million compared to $76.1 million in Q2 2019 [17] - Net operating income grew by 6.1% to $73.3 million from $69.1 million in Q2 2019 [17] - Adjusted EBITDA for Q2 2020 was $61 million, up from $58.6 million in 2019 [18] - AFFO decreased year-over-year to $0.44 per share, with total AFFO at $39.8 million [18] - Net debt at the end of Q2 2020 was $1.8 billion, with a weighted average interest rate of 3.2% [19] Business Line Data and Key Metrics Changes - The company completed 8 new acquisitions in Q2 2020, totaling $31 million, with an average remaining lease term of 18.1 years [11] - The property portfolio is nearly fully occupied at 99.6% leased, with a weighted average remaining lease term of 8.9 years, up from 8 years a year ago [13] - The property mix is currently 48% office, 47% industrial and distribution, and 5% retail, compared to 53% office, 41% industrial and distribution, and 6% retail a year ago [14] Market Data and Key Metrics Changes - Cash rent collection rates were over 98%, with 99% from top 20 tenants, 99% from U.K. assets, 100% from other European tenants, and 96% from U.S. assets [8][9] - Industrial and distribution assets grew by nearly 15% year-over-year, now making up 47% of the portfolio [15] Company Strategy and Development Direction - The company remains focused on acquiring high-quality industrial and distribution properties, along with select office properties leased to investment-grade tenants [16] - The company is actively engaged in the acquisition marketplace, adjusting cap rate targets while maintaining a focus on credit quality [12][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges posed by COVID-19, highlighting strong rent collection and a solid portfolio [22] - The company anticipates that bids and asks will converge to establish a new, potentially more attractive normal in the acquisition market [12] Other Important Information - The company has a well-cushioned interest coverage ratio of 3.9x and liquidity of approximately $331.1 million as of June 30, 2020 [20][21] - The company has not abated any rents during the pandemic, instead opting for deferrals to be paid back in 2021 [27][28] Q&A Session Summary Question: How is the company handling nonpayers of rent? - The company has deferred portions of rent for about a dozen tenants, with repayment scheduled for 2021, but has not abated any rents [27][28] Question: What changes has the company made to its expectations regarding acquisitions? - The company is seeing increased deal flow and is still focused on high-quality industrial and distribution properties, adjusting cap rate expectations due to perceived risks [31] Question: What is the reason for the lower collection rate in the U.S.? - Management indicated that the lower collection rate is not solely attributable to retail but is spread across various sectors, with the U.S. being hit harder than Europe [33][34] Question: How is the competitive landscape for acquisitions evolving? - The company remains selective but is finding good deals, with an average cap rate of 8.51% for closed transactions in 2020 [36] Question: What is the company's approach to maintaining liquidity? - The company plans to keep cash on the balance sheet for the time being, evaluating the need for equity or debt market access on a case-by-case basis [37] Question: How is the acquisition pipeline compared to pre-COVID levels? - The company is starting to see more deals and is being selective, but has not disclosed specific pipeline sizes [40][42] Question: What is the status of the office portfolio in light of remote work trends? - The company is confident in its office properties, which are primarily single-tenant and investment-grade, and is not overly concerned about the shift to remote work [43] Question: Are there any requests from tenants for additional rent or CapEx? - The company has had discussions with tenants about expanding properties, particularly in Europe, and is open to investing in properties as needed [49][51]

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents Global Net Lease, Inc.'s unaudited consolidated financial statements for the periods ended March 31, 2020 and 2019 [Note 1 — Organization](index=12&type=section&id=Note%201%20%E2%80%94%20Organization) Global Net Lease, Inc. operates as a REIT, investing in single-tenant net-leased commercial properties with a diversified portfolio and high occupancy - The Company is externally managed by Global Net Lease Advisors, LLC and its properties by Global Net Lease Properties, LLC, both related parties under common control with AR Global[32](index=32&type=chunk) Portfolio Snapshot as of March 31, 2020 | Metric | Value | | :--- | :--- | | Properties Owned | 288 | | Rentable Square Feet | 34.2 million | | Occupancy | 99.6% | | Weighted-Average Remaining Lease Term | 9.0 years | | Geographic Split (by annualized rental income) | 64% U.S. & Canada, 36% Europe | [Note 2 — Summary of Significant Accounting Policies](index=12&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's significant GAAP accounting policies, including revenue recognition, real estate investments, and the impact of COVID-19 on lease modifications - The Company's revenues are primarily from lease contracts, reported on a straight-line basis, with future minimum base rental payments projected at **$2.39 billion**[39](index=39&type=chunk)[43](index=43&type=chunk) - In response to COVID-19, the Company utilized FASB and SEC relief to treat pandemic-related lease amendments as provisions within pre-concession arrangements, avoiding full lease modification reassessment[79](index=79&type=chunk)[83](index=83&type=chunk) - The Company adopted ASU 2016-13 (Credit Losses) and ASU 2018-13 (Fair Value Measurement) on January 1, 2020, with no material impact on its financial statements[85](index=85&type=chunk)[86](index=86&type=chunk) [Note 3 — Real Estate Investments, Net](index=20&type=section&id=Note%203%20%E2%80%94%20Real%20Estate%20Investments%2C%20Net) This note details the company's real estate investment activities, including property acquisitions, dispositions, and geographic concentrations of its portfolio Property Acquisitions | Period | Properties Purchased | Cash Paid (in thousands USD) | | :--- | :--- | :--- | | Q1 2020 | 10 | $113,117 | | Q1 2019 | 2 | $23,454 | - The company had no property dispositions during Q1 2020, while one property was sold for a gain of **$0.9 million** in Q1 2019[93](index=93&type=chunk) Geographic Concentration by Annualized Rental Income | Country / U.S. State | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | United States | 64.4% | 63.0% | | Michigan | 14.4% | 14.6% | | United Kingdom | 16.9% | 18.2% | [Note 4 — Mortgage Notes Payable, Net](index=23&type=section&id=Note%204%20%E2%80%94%20Mortgage%20Notes%20Payable%2C%20Net) This note details the company's mortgage notes payable, totaling **$1.25 billion** net, secured by 115 properties, with a 3.4% weighted-average interest rate Mortgage Notes Payable, Net | Metric | March 31, 2020 (in thousands USD) | December 31, 2019 (in thousands USD) | | :--- | :--- | :--- | | Gross mortgage notes payable | $1,263,525 | $1,287,448 | | Mortgage notes payable, net | $1,249,308 | $1,272,154 | | Weighted-average effective interest rate | 3.4% | N/A | - As of March 31, 2020, the company was in compliance with all financial covenants under its mortgage notes payable agreements[106](index=106&type=chunk) [Note 5 — Credit Facilities](index=26&type=section&id=Note%205%20%E2%80%94%20Credit%20Facilities) This note details the company's senior unsecured credit facility, including its revolving credit and term loan balances, maturity dates, and key financial covenants Credit Facility Balances | Facility | March 31, 2020 (in thousands USD) | December 31, 2019 (in thousands USD) | | :--- | :--- | :--- | | Revolving Credit Facility | $399,213 | $199,071 | | Term Loan, Net | $390,450 | $397,893 | | Total Credit Facility | $789,663 | $596,964 | - As of March 31, 2020, approximately **$23.2 million** was available for future borrowings under the Revolving Credit Facility[121](index=121&type=chunk) - The Credit Facility restricts distributions to not exceed **100% of Adjusted FFO** for four consecutive quarters, with a limited exception allowing up to 105% for one quarter annually[123](index=123&type=chunk) [Note 6 — Fair Value of Financial Instruments](index=28&type=section&id=Note%206%20%E2%80%94%20Fair%20Value%20of%20Financial%20Instruments) This note discusses the fair value measurement of the company's financial instruments, including derivatives classified as Level 2 and mortgage notes payable as Level 3 Fair Value of Derivatives (Level 2) | Instrument | March 31, 2020 (in thousands USD) | December 31, 2019 (in thousands USD) | | :--- | :--- | :--- | | Foreign currency forwards, net | $4,807 | $2,726 | | Interest rate swaps, net | $(13,469) | $(6,082) | - The fair value of the Company's mortgage notes payable was approximately **$1.3 billion** as of March 31, 2020, classified as Level 3 in the fair value hierarchy[135](index=135&type=chunk) [Note 7 — Derivatives and Hedging Activities](index=29&type=section&id=Note%207%20%E2%80%94%20Derivatives%20and%20Hedging%20Activities) The company uses derivatives, including interest rate swaps and foreign currency forwards, to manage interest rate and currency risks, with fair value changes recorded in AOCI or net income Net Fair Value of Derivatives | Type | March 31, 2020 (in thousands USD) | December 31, 2019 (in thousands USD) | | :--- | :--- | :--- | | Designated as hedging instruments | $(13,414) | $(6,008) | | Not designated as hedging instruments | $4,752 | $2,652 | - For Q1 2020, a **$8.4 million loss** on cash flow hedges was recognized in AOCI, and a **$0.8 million loss** was reclassified from AOCI into interest expense[146](index=146&type=chunk) [Note 8 — Stockholders' Equity](index=33&type=section&id=Note%208%20%E2%80%94%20Stockholders%27%20Equity) This note details stockholders' equity components, including common and preferred stock outstanding, ATM program activity, and the recent common stock dividend reduction - In March 2020, the board approved a common stock dividend reduction to an annual rate of **$1.60 per share** (**$0.40 quarterly**), effective Q2 2020[163](index=163&type=chunk)[234](index=234&type=chunk) - The Company did not sell any Common Stock or Series B Preferred Stock shares through its ATM programs during Q1 2020[159](index=159&type=chunk)[162](index=162&type=chunk) Preferred Stock Outstanding as of March 31, 2020 | Series | Shares Issued and Outstanding | | :--- | :--- | | 7.25% Series A | 6,799,467 | | 6.875% Series B | 3,450,000 | [Note 9 — Commitments and Contingencies](index=35&type=section&id=Note%209%20%E2%80%94%20Commitments%20and%20Contingencies) This note covers commitments and contingencies, primarily ground leases with **$48.9 million** in ROU assets and **$23.4 million** in lease liabilities, and confirms no material legal proceedings Ground Lease Metrics as of March 31, 2020 | Metric | Value (in millions USD) | | :--- | :--- | | ROU Assets | $48.9 | | Lease Liabilities | $23.4 | | Weighted-Average Remaining Lease Term | 33.3 years | | Weighted-Average Discount Rate | 4.33% | - There are no material legal or regulatory proceedings pending or known to be contemplated against the Company[174](index=174&type=chunk) [Note 10 — Related Party Transactions](index=36&type=section&id=Note%2010%20%E2%80%94%20Related%20Party%20Transactions) This note details related party transactions, including **$8.8 million** in operating fees to the Advisor and Property Manager, and recent amendments to incentive compensation terms Related Party Fees Incurred | Fee Type | Q1 2020 (in thousands USD) | Q1 2019 (in thousands USD) | | :--- | :--- | :--- | | Asset management fees | $7,376 | $6,671 | | Property management fees | $1,418 | $1,372 | | Total | $8,794 | $8,043 | - On May 6, 2020, the Advisory Agreement was amended to temporarily lower Core AFFO Per Share thresholds for Advisor incentive compensation due to COVID-19 market disruption[184](index=184&type=chunk) [Note 11 — Economic Dependency](index=40&type=section&id=Note%2011%20%E2%80%94%20Economic%20Dependency) This note highlights the company's economic dependency on its external Advisor and affiliates for essential asset, property, and administrative management services - The Company is dependent upon the Advisor and its affiliates for essential services including asset management, property management, and administrative functions[203](index=203&type=chunk)[204](index=204&type=chunk) [Note 12 — Equity-Based Compensation](index=40&type=section&id=Note%2012%20%E2%80%94%20Equity-Based%20Compensation) This note describes the company's equity-based compensation plans, including the 2018 Multi-Year Outperformance Agreement and Restricted Share Plan expenses - The Company recorded compensation expense of **$2.4 million** in Q1 2020 related to the 2018 OPP with the Advisor, compared to **$2.0 million** in Q1 2019[217](index=217&type=chunk) - The 2018 OPP allows the Advisor to earn a maximum of **2,554,930 LTIP Units** based on absolute and relative TSR performance goals over a three-year period ending June 2, 2021[220](index=220&type=chunk) - Compensation expense for Restricted Stock Units granted to independent directors was **$0.1 million** for the three months ended March 31, 2020[212](index=212&type=chunk) [Note 13 — Earnings Per Share](index=45&type=section&id=Note%2013%20%E2%80%94%20Earnings%20Per%20Share) This note explains the calculation of basic and diluted earnings per share, detailing the two-class method and the impact of unvested equity awards Earnings Per Share Calculation | Metric | Q1 2020 (in thousands USD, except per share data) | Q1 2019 (in thousands USD, except per share data) | | :--- | :--- | :--- | | Net income attributable to common stockholders | $5,038 | $5,791 | | Weighted average shares outstanding - Basic | 89,458,753 | 81,474,615 | | Weighted average shares outstanding - Diluted | 89,499,294 | 82,798,432 | | Basic and diluted EPS | $0.05 | $0.07 | [Note 14 — Subsequent Events](index=45&type=section&id=Note%2014%20%E2%80%94%20Subsequent%20Events) This note details significant subsequent events, including a common stock dividend reduction, adoption of a stockholder rights plan, and an amendment to the Advisory Agreement - The board approved a reduction in the quarterly common stock dividend to **$0.40 per share**, effective with the dividend declared on April 1, 2020[234](index=234&type=chunk)[236](index=236&type=chunk) - In April 2020, the company adopted a short-term stockholder rights plan, expiring April 2021, to protect against hostile takeovers during COVID-19 market volatility[237](index=237&type=chunk) - On May 6, 2020, the Advisory Agreement was amended to temporarily lower performance thresholds for the Advisor's incentive compensation due to COVID-19 market disruption[238](index=238&type=chunk) Consolidated Balance Sheet Highlights | Account | March 31, 2020 (in thousands USD) | December 31, 2019 (in thousands USD) | | :--- | :--- | :--- | | Total real estate investments, net | $3,284,800 | $3,246,141 | | Cash and cash equivalents | $343,447 | $270,302 | | Total Assets | $3,815,353 | $3,701,605 | | Total Liabilities | $2,165,396 | $1,991,647 | | Total Equity | $1,649,957 | $1,709,958 | Consolidated Statement of Operations Highlights | Account | Three Months Ended March 31, 2020 (in thousands USD) | Three Months Ended March 31, 2019 (in thousands USD) | | :--- | :--- | :--- | | Revenue from tenants | $79,242 | $75,468 | | Total expenses | $55,433 | $52,282 | | Operating income | $23,809 | $24,078 | | Net income | $9,601 | $8,276 | | Net income attributable to common stockholders | $5,038 | $5,791 | | Basic and diluted EPS | $0.05 | $0.07 | Consolidated Statement of Cash Flows Highlights | Account | Three Months Ended March 31, 2020 (in thousands USD) | Three Months Ended March 31, 2019 (in thousands USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,895 | $24,751 | | Net cash used in investing activities | $(115,947) | $(26,642) | | Net cash provided by financing activities | $153,539 | $2,387 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and operating results, including the impact of COVID-19, liquidity, and non-GAAP financial measures - Net income attributable to common stockholders was **$5.0 million** for Q1 2020, compared to **$5.8 million** for Q1 2019[272](index=272&type=chunk) - Revenue from tenants increased to **$79.2 million** in Q1 2020 from **$75.5 million** in Q1 2019, primarily due to property acquisitions[274](index=274&type=chunk) Non-GAAP Performance Measures | Measure | Q1 2020 (in thousands USD) | Q1 2019 (in thousands USD) | | :--- | :--- | :--- | | FFO attributable to common stockholders | $38,571 | $36,202 | | Core FFO attributable to common stockholders | $38,851 | $36,464 | | AFFO attributable to common stockholders | $39,822 | $39,504 | - As of March 31, 2020, the company had **$343.4 million** in cash and cash equivalents and total debt outstanding of **$2.1 billion** with a weighted-average interest rate of **3.1%**[297](index=297&type=chunk)[307](index=307&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no material change in the company's market risk exposure during Q1 2020, referring to the Annual Report for detailed discussion - There was no material change in the company's exposure to market risk during Q1 2020[351](index=351&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2020[352](index=352&type=chunk) - No material changes to the company's internal control over financial reporting occurred during Q1 2020[353](index=353&type=chunk) [PART II - OTHER INFORMATION](index=56&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) This section reports no material legal proceedings involving the company during the period - The company reports no material legal proceedings[354](index=354&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) This section updates the company's risk factors, highlighting new risks related to the COVID-19 pandemic and the recently adopted stockholder rights plan - A new, significant risk factor addresses the COVID-19 pandemic, which has caused severe disruptions and may worsen, impacting tenant financial health, rent collections, and overall economic activity[355](index=355&type=chunk) - The pandemic could lead to a sustained shift away from in-person work environments, adversely affecting demand for office space and making it difficult to renew or re-lease properties at favorable rates[356](index=356&type=chunk) - The stockholder rights plan adopted in April 2020 could make it more difficult for a third party to acquire the company, potentially discouraging offers that might include a premium for stockholders[368](index=368&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20of%20Registered%20Securities) This section reports no sales of unregistered equity securities or repurchases of the company's equity securities during the period - There were no sales of unregistered securities or repurchases of equity securities by the company during the quarter[370](index=370&type=chunk)[371](index=371&type=chunk) [Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the period - The company reports no defaults upon senior securities[372](index=372&type=chunk) [Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) This section discloses the May 6, 2020 amendment to the Advisory Agreement, temporarily lowering incentive compensation hurdles and changing payment terms - On May 6, 2020, the company amended its Advisory Agreement to temporarily lower performance hurdles for the Advisor's incentive compensation due to the COVID-19 pandemic[375](index=375&type=chunk) - The amendment changes the payment form for incentive compensation earned between April 1, 2020, and December 31, 2020, to be **100% cash** instead of the usual 50% cash and 50% stock[378](index=378&type=chunk) [Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with or incorporated by reference into the Quarterly Report on Form 10-Q

Global Net Lease, Inc. (NYSE:GNL) Q1 2020 Earnings Conference Call May 6, 2020 11:00 AM ET Company Participants Louisa Quarto - Executive Vice President James Nelson - President and Chief Executive Officer Christopher Masterson - Chief Financial Officer Conference Call Participants Benjamin Zucker - Aegis Capital Corp. Barry Oxford - D.A. Davidson Companies John Massocca - Ladenburg Thalmann & Co. Inc. Operator Good morning and welcome to the Global Net Lease First Quarter 2020 Earnings Conference Call. All ...

PART I [Business](index=6&type=section&id=Item%201.%20Business) Global Net Lease, Inc. is a REIT investing in diversified, single-tenant net-leased commercial properties across the U.S., Canada, and Europe - The company's investment strategy focuses on acquiring a **diversified portfolio** of commercial properties, primarily through **sale-leaseback transactions** involving single-tenant, net-leased assets[21](index=21&type=chunk)[27](index=27&type=chunk) - In 2019, the company acquired **39 properties** for a total of **$562.7 million**, with a strategic focus on **industrial/distribution (65%)** and **office (35%)** properties[28](index=28&type=chunk) Portfolio Overview as of December 31, 2019 | Metric | Value | | :--- | :--- | | Properties Owned | 278 | | Rentable Square Feet | 31.6 million | | Occupancy | 99.6% leased | | Weighted Average Remaining Lease Term | 8.3 years | | Geographic Split (by annualized rental income) | 63.2% U.S. & Canada, 37% Europe | 2019 Equity Offering Summary | Offering Type | Gross Proceeds | | :--- | :--- | | Common Stock ATM Program | $262.6 million | | Series A Preferred Stock ATM Program | $35.3 million | | Series B Preferred Stock Underwritten Offering | $86.2 million | - As of December 31, 2019, the company's aggregate gross borrowings were **49.3%** of the purchase price of its real estate investments, or **51.1%** of total assets[34](index=34&type=chunk) [Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, property-related, financial, and REIT compliance risks, including external advisor dependence and geographic concentrations - The company is **highly dependent on its external Advisor and Property Manager** for all key operations, and its executive officers face **conflicts of interest** due to their roles in affiliated entities[54](index=54&type=chunk)[62](index=62&type=chunk)[98](index=98&type=chunk) - A significant portion of the company's portfolio is concentrated geographically, with **37% from Europe** and **15% from Michigan**, magnifying the effects of regional economic downturns[69](index=69&type=chunk)[76](index=76&type=chunk) - The company is exposed to risks from its **international investments**, including adverse changes in foreign laws, **currency exchange rate fluctuations** (particularly from **Brexit**), and political or economic instability in Europe[72](index=72&type=chunk)[76](index=76&type=chunk)[80](index=80&type=chunk) - The company's credit facilities contain **restrictive covenants** that may limit its ability to pay dividends, which cannot exceed **100% of its Adjusted FFO** (as defined in the credit facility) over four consecutive quarters, with limited exceptions[58](index=58&type=chunk)[167](index=167&type=chunk) - Failure to maintain **REIT qualification** would subject the company to **U.S. federal income tax at corporate rates**, significantly reducing net earnings available for distribution to stockholders[176](index=176&type=chunk)[177](index=177&type=chunk) - As of December 31, 2019, **31.8% of tenants** are not rated or are ranked **below investment grade**, posing a higher risk of default compared to investment-grade tenants[139](index=139&type=chunk) [Unresolved Staff Comments](index=39&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[201](index=201&type=chunk) [Properties](index=40&type=section&id=Item%202.%20Properties) The company's portfolio comprises 278 properties totaling 31.6 million square feet, diversified geographically and by tenant industry, with future lease payments detailed Portfolio Geographic Distribution by Square Feet (as of Dec 31, 2019) | Country/Location | Number of Properties | Square Feet (in thousands) | % of Total Square Feet | | :--- | :--- | :--- | :--- | | United States | 195 | 21,823 | 69.0% | | United Kingdom | 42 | 4,031 | 12.7% | | France | 7 | 1,632 | 5.2% | | Germany | 5 | 1,584 | 5.0% | | Finland | 5 | 1,457 | 4.6% | | Other | 27 | 1,090 | 3.5% | | **Total** | **278** | **31,617** | **100.0%** | Top 5 Tenant Industries by Annualized Straight-Line Rent (as of Dec 31, 2019) | Industry | % of Total Annualized Rent | | :--- | :--- | | Financial Services | 9% | | Healthcare | 8% | | Technology | 7% | | Aerospace | 6% | | Freight | 5% | Future Minimum Base Rent Payments (Cash Basis) | Year | Amount (in thousands) | | :--- | :--- | | 2020 | $294,087 | | 2021 | $295,428 | | 2022 | $286,725 | | 2023 | $264,583 | | 2024 | $225,344 | | Thereafter | $281,375 | - No single tenant or property accounted for more than **10%** or **5%**, respectively, of the total portfolio's annualized rental income as of December 31, 2019[219](index=219&type=chunk)[220](index=220&type=chunk) [Legal Proceedings](index=51&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no material pending legal proceedings - None[222](index=222&type=chunk) [Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not applicable[223](index=223&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=52&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) GNL common stock trades on NYSE, with quarterly dividends for common and preferred shares, and equity compensation plans tied to advisor performance Annualized Dividend Rates | Security | Annual Dividend per Share | | :--- | :--- | | Common Stock | $2.13 | | Series A Preferred Stock | $1.8125 (7.25% of liquidation preference) | | Series B Preferred Stock | $1.71875 (6.875% of liquidation preference) | - For the year ended December 31, 2019, the tax characterization of the common stock dividend was **69.1% return of capital** and **30.9% ordinary dividends**[230](index=230&type=chunk) - As of December 31, 2019, there were **2,554,930 securities** to be issued upon exercise of outstanding rights, primarily representing **LTIP Units** awarded to the Advisor under the **2018 Outperformance Plan**[235](index=235&type=chunk) [Selected Financial Data](index=54&type=section&id=Item%206.%20Selected%20Financial%20Data) The company's selected financial data for 2019 shows total assets of **$3.70 billion**, tenant revenue of **$306.2 million**, and net income of **$34.5 million** Selected Financial Data (in thousands) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | **Balance Sheet Data** | | | | Total assets | $3,701,605 | $3,309,478 | | Total liabilities | $1,991,647 | $1,880,732 | | Total equity | $1,709,958 | $1,428,746 | | **Operating Data** | | | | Revenue from tenants | $306,214 | $282,207 | | Operating income | $114,895 | $68,020 | | Net income attributable to common stockholders | $34,535 | $1,082 | | **Cash Flow Data** | | | | Cash flows provided by operations | $145,999 | $144,597 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes 2019 revenue growth to acquisitions, with net income significantly increasing due to property dispositions and strong liquidity Results of Operations Comparison (in millions) | Line Item | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Revenue from tenants | $306.2 | $282.2 | +8.5% | | Operating Fees to Related Parties | $33.3 | $28.2 | +18.1% | | Gain (Loss) on Dispositions | $23.6 | ($5.8) | N/A | | Interest Expense | $64.2 | $58.0 | +10.7% | | Net Income Attributable to Common Stockholders | $34.5 | $1.1 | +3036% | - The increase in revenue was primarily driven by **property acquisitions**. The increase in operating fees was due to a **$4.3 million** rise in the **Variable Base Management Fee** linked to **equity offerings**[282](index=282&type=chunk)[285](index=285&type=chunk) Non-GAAP Performance Measures (in millions) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | FFO attributable to common stockholders | $143.3 | $131.4 | +9.1% | | Core FFO attributable to common stockholders | $145.6 | $149.1 | -2.3% | | AFFO attributable to common stockholders | $159.7 | $147.3 | +8.4% | - In 2019, the company acquired **39 properties** for **$562.7 million** and sold **97 properties** for a total price of **$311.3 million**, generating a **gain of $23.6 million**[314](index=314&type=chunk)[315](index=315&type=chunk) - Total debt increased from **$1.8 billion** to **$1.9 billion** year-over-year. In August 2019, the company amended its credit facility, increasing total commitments to **$1.235 billion** and lowering the interest rate margin[298](index=298&type=chunk)[322](index=322&type=chunk)[324](index=324&type=chunk) - For the year ended December 31, 2019, **90.1%** of dividends were funded from cash flows from operations, with the remaining **9.9%** funded from available cash on hand from borrowings[368](index=368&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=77&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and foreign currency exchange fluctuations, managed through hedging and matching debt currency to rental income - The company's main market risks are **interest rate** and **foreign currency exchange rate fluctuations**[379](index=379&type=chunk) - As of December 31, 2019, **88.2%** of the company's **$1.9 billion** in total debt was either **fixed-rate** or swapped to a fixed rate, with a weighted average interest rate of **3.1%** per annum on this portion[327](index=327&type=chunk)[383](index=383&type=chunk) - A **1% increase** in interest rates would increase annual interest expense on the unhedged variable-rate portion of debt by **$18.2 million**[388](index=388&type=chunk) - Foreign currency risk is managed by **matching debt and rental obligations** in the same currency and using **hedging instruments**. The company benefits from a **weaker USD** relative to the EUR, GBP, and CAD[389](index=389&type=chunk) [Financial Statements and Supplementary Data](index=81&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the company's consolidated financial statements and supplementary data, which begin on page F-1 - The required information is **incorporated by reference** to the consolidated financial statements beginning on page F-1 of the Form 10-K[399](index=399&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=81&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[400](index=400&type=chunk) [Controls and Procedures](index=81&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and independent auditors confirmed the effectiveness of disclosure controls and internal control over financial reporting as of December 31, 2019 - Management concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2019[401](index=401&type=chunk) - Management's assessment concluded that internal control over financial reporting was **effective** as of December 31, 2019, an opinion which was also **audited and confirmed by PricewaterhouseCoopers LLP**[403](index=403&type=chunk)[404](index=404&type=chunk) [Other Information](index=81&type=section&id=Item%209B.%20Other%20Information) The company reports no other information in this section - None[406](index=406&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=82&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2020 proxy statement - Information is **incorporated by reference** from the registrant's definitive proxy statement for the 2020 Annual Meeting of Stockholders[409](index=409&type=chunk) [Executive Compensation](index=82&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details are incorporated by reference from the company's 2020 definitive proxy statement - Information is **incorporated by reference** from the registrant's definitive proxy statement for the 2020 Annual Meeting of Stockholders[410](index=410&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=82&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information for beneficial owners and management is incorporated by reference from the 2020 proxy statement - Information is **incorporated by reference** from the registrant's definitive proxy statement for the 2020 Annual Meeting of Stockholders[411](index=411&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=82&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Details on related party transactions and director independence are incorporated by reference from the 2020 proxy statement - Information is **incorporated by reference** from the registrant's definitive proxy statement for the 2020 Annual Meeting of Stockholders[412](index=412&type=chunk) [Principal Accounting Fees and Services](index=82&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2020 proxy statement - Information is **incorporated by reference** from the registrant's definitive proxy statement for the 2020 Annual Meeting of Stockholders[413](index=413&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=83&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statement schedules and exhibits filed as part of the Annual Report on Form 10-K - This section provides an **index** of all **financial statement schedules and exhibits** filed with the Form 10-K[416](index=416&type=chunk)[417](index=417&type=chunk) [Form 10-K Summary](index=88&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not provide a summary for its Form 10-K - None[427](index=427&type=chunk) Financial Statements [Consolidated Balance Sheets](index=93&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2019, total assets increased to **$3.70 billion**, driven by real estate investments, with total equity reaching **$1.71 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Total real estate investments, net | $3,246,141 | $2,982,925 | | Cash and cash equivalents | $270,302 | $100,324 | | **Total Assets** | **$3,701,605** | **$3,309,478** | | Mortgage notes payable, net | $1,272,154 | $1,129,807 | | Revolving credit facility | $199,071 | $363,894 | | Term loan, net | $397,893 | $278,727 | | **Total Liabilities** | **$1,991,647** | **$1,880,732** | | **Total Equity** | **$1,709,958** | **$1,428,746** | [Consolidated Statements of Operations](index=94&type=section&id=Consolidated%20Statements%20of%20Operations) For 2019, tenant revenue rose to **$306.2 million**, and net income attributable to common stockholders significantly increased to **$34.5 million** Consolidated Statement of Operations Highlights (in thousands, except per share data) | Account | 2019 | 2018 | | :--- | :--- | :--- | | Revenue from tenants | $306,214 | $282,207 | | Total expenses | $214,935 | $208,436 | | Gain (loss) on dispositions | $23,616 | ($5,751) | | Operating income | $114,895 | $68,020 | | Net income | $46,476 | $10,897 | | Net income attributable to common stockholders | $34,535 | $1,082 | | Basic net income per share | $0.40 | $0.01 | [Consolidated Statements of Cash Flows](index=97&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In 2019, operating cash flow remained stable at **$146.0 million**, with financing activities providing **$300.0 million**, leading to a **$170.0 million** cash increase Consolidated Statement of Cash Flows Highlights (in thousands) | Category | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $145,999 | $144,597 | | Net cash used in investing activities | ($294,476) | ($457,946) | | Net cash provided by financing activities | $300,003 | $312,192 | | **Net change in cash, cash equivalents and restricted cash** | **$151,526** | **($1,157)** | - Key investing activities in 2019 included **$562.7 million** for real estate investments, offset by **$288.4 million** in proceeds from dispositions[461](index=461&type=chunk) - Major financing activities in 2019 included **$258.4 million** in net proceeds from common stock, **$117.7 million** from preferred stock, and a net increase in mortgage and term loan debt, offset by **$161.5 million** in dividend payments and net repayments on the revolving credit facility[462](index=462&type=chunk)