[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)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission file number: 001-37390 Global Net Lease, Inc. (Exact name of registrant as specified in its charter) | Maryland | | 45- ...

Property Portfolio - As of June 30, 2019, the company owned 288 properties with a total of 28.3 million rentable square feet, achieving a leasing rate of 99.6%[268] - The weighted-average remaining lease term for the properties is 8.0 years, with 57.6% located in the U.S. and 42.4% in Europe[268] - The company has a diversified portfolio primarily focused on single tenant net-leased commercial properties[267] - Total square feet of properties acquired since June 30, 2018, amounted to 28,332 thousand square feet across 288 properties[278] - The average remaining lease term for properties in the portfolio was approximately 8.0 years as of June 30, 2019[278] - The company completed multiple acquisitions, including significant properties like Contractors Steel Company with 1,392 thousand square feet[276] Financial Performance - Net income attributable to common stockholders increased to $12.6 million for Q2 2019, up from $5.3 million in Q2 2018, reflecting a significant improvement in profitability[280] - Revenue from tenants rose to $76.1 million in Q2 2019, compared to $71.0 million in Q2 2018, driven by 21 property acquisitions since June 30, 2018[281] - Property operating expenses decreased to $7.0 million in Q2 2019 from $8.2 million in Q2 2018, primarily due to lower insurance costs and real estate taxes[282] - The company recognized a bad debt expense of $0.1 million in Q2 2019, which is now recorded as a reduction to revenue from tenants[281] - Rental income rose to $141.4 million for the six months ended June 30, 2019, compared to $129.4 million in 2018, primarily due to the acquisition of 21 properties since June 30, 2018[304] - The company recognized a net income attributable to common stockholders of $18.4 million for the six months ended June 30, 2019, compared to $7.6 million in 2018[303] Expenses and Costs - Interest expense rose to $15.7 million for the three months ended June 30, 2019, compared to $14.4 million in 2018, attributed to an increase in total debt from $1.7 billion to $1.8 billion[295] - Depreciation and amortization expense increased to $31.1 million for the three months ended June 30, 2019, up from $29.8 million in 2018, mainly due to the acquisition of additional properties[294] - General and administrative expenses decreased to $2.3 million for the three months ended June 30, 2019, down from $2.6 million in 2018[287] - General and administrative expenses increased to $5.5 million for the six months ended June 30, 2019, compared to $4.6 million in the same period of 2018, primarily due to higher professional fees[310] - The company incurred acquisition, transaction, and other costs of $847,000 for the three months ended June 30, 2019, down from $1.114 million in 2018, a decrease of 24%[376] Cash Flow and Financing - Net cash provided by operating activities was $71.2 million for the six months ended June 30, 2019, compared to $71.0 million in the same period of 2018, reflecting net income of $23.6 million adjusted for non-cash items[325][326] - Net cash used in investing activities was $135.5 million for the six months ended June 30, 2019, driven by property acquisitions of $211.0 million, partially offset by net proceeds from asset dispositions of $89.9 million[327][328] - Net cash provided by financing activities was $153.1 million during the six months ended June 30, 2019, primarily from mortgage notes payable of $375.4 million and net proceeds from the issuance of Common Stock of $150.6 million[329] - The company raised $152.8 million from the sale of 7.8 million shares of Common Stock through the ATM Program in January 2019, and has a new equity distribution agreement to raise up to $250.0 million[340] Debt and Leverage - As of June 30, 2019, the company had total debt outstanding of $1.8 billion with a weighted-average interest rate of 3.0%[343] - The company’s debt leverage ratio was 49.4% as of June 30, 2019, with a weighted-average maturity of 4.6 years[347] - The company entered into a Credit Facility Amendment on August 1, 2019, increasing total commitments to $1.235 billion and lowering the interest rate[355] - Following the Credit Facility Amendment, the weighted-average effective interest rate of the Credit Facility was reduced to 2.30%[357] - The company has future scheduled principal payments on mortgage notes of $180.7 million for the year ending December 31, 2019[354] Dividends and Distributions - The company historically paid dividends at an annualized rate of $2.13 per share, changing to quarterly payments starting April 2019[378] - Dividends on Series A Preferred Stock are $0.453125 per share per quarter, equating to 7.25% of the $25.00 liquidation preference per share annually[379] - Total dividends and distributions for the three months ended March 31, 2019, amounted to $45,859,000, with cash flows from operations covering 48.6% of the dividends after preferred stock payments[384] - For the six months ended June 30, 2019, total dividends and distributions were $63,363,000, with cash flows from operations covering 62.8% of the dividends after preferred stock payments[384] Risk Factors - The company may face challenges in raising additional debt or equity financing on attractive terms, impacting future acquisitions[264] - The company is subject to risks associated with international investments, including foreign currency exchange rate fluctuations and compliance with foreign laws[264] - The company may not generate sufficient cash flows to pay dividends or fund operations, potentially leading to unfavorable borrowing[264] - The company is exposed to foreign currency fluctuations and uses derivatives to manage this risk[385] - There has been no material change in market risk exposure during the six months ended June 30, 2019[392]

Property Portfolio - As of March 31, 2019, the company owned 343 properties with a total of 27.4 million rentable square feet, which were 99.5% leased[270] - The weighted-average remaining lease term for the properties was 8.1 years[270] - 55.8% of the properties were located in the U.S. and 44.2% in Europe[270] - Total square footage of the portfolio reached 27,389 thousand square feet as of March 31, 2019[280] - The average remaining lease term across the portfolio was 8.1 years as of March 31, 2019[280] Financial Performance - Revenue from tenants increased to $75.5 million for Q1 2019, up from $68.1 million in Q1 2018, driven by net acquisitions of 16 properties[282] - Property operating expenses decreased slightly to $7.4 million in Q1 2019 from $7.5 million in Q1 2018, primarily related to insurance costs and real estate taxes[283] - Operating fees to related parties rose to $8.0 million in Q1 2019, compared to $6.8 million in Q1 2018, partly due to a $1.0 million increase in Variable Base Management Fee[285] - The company recognized a bad debt expense of $0.1 million in Q1 2019, which is now recorded as a reduction to revenue from tenants[282] - For the three months ended March 31, 2019, net income attributable to common stockholders was $5,791,000, compared to $2,361,000 for the same period in 2018[352] - FFO attributable to common stockholders for Q1 2019 was $36,202,000, an increase from $31,857,000 in Q1 2018, representing a growth of approximately 10.6%[352] - Core FFO attributable to common stockholders for Q1 2019 was $36,464,000, up from $33,103,000 in Q1 2018, indicating a year-over-year increase of about 7.1%[352] - AFFO attributable to common stockholders for Q1 2019 was $39,504,000, compared to $35,081,000 in Q1 2018, reflecting a growth of approximately 12.9%[352] Cash Flow and Dividends - Net cash provided by operating activities was $24.8 million in Q1 2019, down from $40.7 million in Q1 2018, reflecting a decrease in working capital items[302][303] - Dividends paid to common stockholders for Q1 2019 totaled $43,270,000, with cash flows from operations covering 48.6% of this amount after preferred stock dividends[359] - The company anticipates paying future dividends on a quarterly basis, maintaining an annualized rate of $2.13 per share[354] - Cash flows provided by operations for Q1 2019 were $24,751,000, with available cash on hand contributing $23,563,000 to total dividend coverage[359] - The company’s board of directors may alter or suspend dividend payments based on financial conditions and capital expenditure requirements[356] - The company utilized an exception to pay dividends between 95% and 100% of Adjusted FFO during the quarter ended March 31, 2019[357] Debt and Financing - As of March 31, 2019, the company had total debt outstanding of $1.7 billion, with a weighted-average interest rate of 3.0% per annum[319] - The company's debt leverage ratio was 45.8% as of March 31, 2019, based on total debt as a percentage of the total purchase price of real estate investments[322] - The company raised $152.8 million from the sale of 7,759,322 shares of Common Stock through the ATM Program during the three months ended March 31, 2019[316] - The company sold 68,104 shares of Series A Preferred Stock for gross proceeds of $1.7 million during the same period[317] - As of March 31, 2019, 83.7% of the company's total debt bore interest at fixed rates or was swapped to fixed rates[321] - The company has future scheduled principal payments on mortgage notes of $214.5 million for the year ending December 31, 2019, with a weighted average interest rate of 2.4% per year[326] - The company expects to borrow an aggregate of €51.5 million under a loan agreement, with proceeds used to repay outstanding mortgage indebtedness[327] - The Credit Facility had a weighted-average effective interest rate of 2.6% as of March 31, 2019, after considering interest rate swaps[333] - The company had approximately $149.2 million available for future borrowings under the Revolving Credit Facility as of March 31, 2019[335] International Operations and Risks - The company is subject to risks associated with international investments, including foreign laws and currency fluctuations[266] - The company experienced a 6.4% decrease in the average exchange rate for British Pounds Sterling to USD and a 7.6% decrease for Euros to USD compared to the same period last year[282] - The company is exposed to fluctuations in foreign currency exchange rates, particularly with GBP-USD and EUR-USD, and uses derivatives to manage this exposure[360] - International assets and operations are subject to taxation in the foreign jurisdictions where they are held or conducted[363] Advisory and Management Fees - The company may face conflicts of interest due to its executive officers being affiliated with the Advisor and AR Global Investments[266] - The company is obligated to pay substantial fees to the Advisor and its affiliates[266] - The company’s advisory agreement includes a Base Management Fee of $18.0 million per annum, with additional variable fees based on performance[286] - Property management fees increased to $1.4 million for the three months ended March 31, 2019, up from $1.2 million in the same period of 2018, primarily due to the acquisition of 16 properties[287] - General and administrative expenses rose to $3.2 million in Q1 2019 from $2.1 million in Q1 2018, mainly due to higher professional fees[289] Market and Economic Risks - Increases in interest rates could raise the company's debt payments[266] - The company may be unable to maintain or increase cash dividends over time[266] - The company may not be able to identify sufficient property acquisitions that meet its investment objectives[266] - The company may be adversely impacted by inflation on leases without indexed escalation provisions, potentially increasing operating expenses[365] - There has been no material change in the company's exposure to market risk during the three months ended March 31, 2019[368] - There are no off-balance sheet arrangements that materially affect the company's financial condition or results[367] - There were no material changes in the company's contractual obligations as of March 31, 2019, compared to the previous year[361] - The company has elected to be taxed as a REIT and must distribute at least 90% of its REIT taxable income annually to maintain this status[362]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission file number: 001-37390 Global Net Lease, Inc. (Exact name of registrant as specified in its charter) Maryland 45-2771978 (State ...