Fixed interest rate of 5.74% is 159 basis points lower than existing debt on re-financed assets Reduces annualized interest expense by over $3.5 million NEW YORK, April 08, 2024 (GLOBE NEWSWIRE) -- Global Net Lease, Inc. (NYSE:GNL) ("GNL" or the "Company") announced today that the Company completed a $237 million commercial mortgage-backed security loan (the "Loan") secured by 20 U.S. industrial properties previously secured under the Company's corporate credit facility. The lead lender for the Loan is Ban ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) Global Net Lease, Inc. manages a diversified global portfolio of 1,296 net lease properties, significantly expanded by the RTL acquisition and management internalization - On **September 12, 2023**, the company acquired The Necessity Retail REIT (RTL) and simultaneously internalized its advisory and property management functions, transitioning from an externally managed to an **internally managed REIT**[17](index=17&type=chunk)[38](index=38&type=chunk) Portfolio Overview as of December 31, 2023 | Metric | Value | | :--- | :--- | | **Total Properties** | 1,296 | | **Rentable Square Feet** | 66.8 million | | **Occupancy** | 96% | | **Weighted-Average Remaining Lease Term** | 6.8 years | Portfolio Composition by Segment (by Annualized Rental Income) | Segment | Percentage | | :--- | :--- | | Industrial & Distribution | 32% | | Multi-Tenant Retail | 27% | | Single-Tenant Retail | 21% | | Office | 20% | - As of December 31, 2023, **57.6%** of rental income was derived from tenants rated as **'Investment Grade'**, which includes both actual and implied investment grade ratings[21](index=21&type=chunk)[22](index=22&type=chunk) - Post-internalization, the company hired its own workforce of **77 employees** as of December 31, 2023, a significant change from having no employees (except one tax specialist in Europe) in the prior year[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from RTL integration, substantial indebtedness, rising interest rates, market downturns, international investments, and REIT qualification challenges - The company may face difficulties integrating the operations of the newly acquired **RTL** and may not realize the anticipated **synergies** from the merger and internalization[44](index=44&type=chunk)[46](index=46&type=chunk) - The company has **substantial indebtedness** and may be unable to repay or refinance it as it becomes due. Increases in **interest rates** could significantly increase debt service costs[44](index=44&type=chunk)[125](index=125&type=chunk) - Market and economic challenges, including **inflation**, decreased demand for **office space**, and the shift to **online retail**, may adversely affect rental revenues and property values[44](index=44&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - International investments, which account for **20%** of properties by annualized rental income, expose the company to **foreign currency exchange rate fluctuations** and differing legal and political environments[60](index=60&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[44](index=44&type=chunk)[161](index=161&type=chunk) [Unresolved Staff Comments](index=31&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[185](index=185&type=chunk) [Cybersecurity](index=31&type=section&id=Item%201C.%20Cybersecurity) The company maintains a cybersecurity risk management program overseen by the Audit Committee, with no material incidents reported - The company has a cybersecurity risk management program designed to protect critical systems and information, which is integrated into its enterprise risk management[187](index=187&type=chunk)[188](index=188&type=chunk) - The Board's Audit Committee provides oversight for the cybersecurity program, reviewing risk assessments and management's implementation of controls[189](index=189&type=chunk) - As of the report date, no known cybersecurity threats or prior incidents have had a material effect on the company's operations, strategy, or financial condition[188](index=188&type=chunk) [Properties](index=32&type=section&id=Item%202.%20Properties) The company's portfolio comprises 1,296 properties across four segments, diversified geographically and by industry, with a weighted average lease term of 6.8 years Portfolio Summary by Segment (as of December 31, 2023) | Segment | Number of Properties | Annualized Straight-Line Rent (in millions) | % of Total Rent | Occupancy | Wtd. Avg. Lease Term (Years) | | :--- | :--- | :--- | :--- | :--- | :--- | | Industrial & Distribution | 219 | $234.66 | 32% | 100% | 7.7 | | Multi-Tenant Retail | 109 | $199.70 | 27% | 88% | 5.2 | | Single-Tenant Retail | 878 | $153.54 | 21% | 98% | 8.3 | | Office | 90 | $142.97 | 20% | 94% | 5.0 | | **Total** | **1,296** | **$730.87** | **100%** | **96%** | **6.8** | Top Tenant Industries by Annualized Rent (as of Dec 31, 2023) | Industry | % of Total Rent | | :--- | :--- | | Financial Services | 6% | | Auto Manufacturing | 6% | | Healthcare | 5% | | Discount Retail | 5% | Geographic Distribution by Annualized Rent (as of Dec 31, 2023) | Country/Region | % of Total Rent | | :--- | :--- | | United States & Canada | 80% | | United Kingdom | 11% | | Other European Countries | 9% | - Lease expirations are concentrated over the next six years, with **12.1%** of annualized straight-line rent expiring in 2028 and **11.5%** in 2029[201](index=201&type=chunk) [Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no material legal proceedings pending - None[205](index=205&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[206](index=206&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE, with a recent dividend reduction to $1.10 annually to manage leverage - In October 2023, following the mergers, the Board set a new annual dividend rate for Common Stock at **$1.42 per share** (**$0.354 quarterly**)[216](index=216&type=chunk) - On February 26, 2024, the Board approved a policy to reduce the Common Stock dividend rate to an anticipated **$1.10 annualized** (**$0.275 quarterly**), effective with the next declaration expected in April 2024, to increase cash available to lower leverage[217](index=217&type=chunk)[390](index=390&type=chunk) - For tax purposes, **100%** of the dividends distributed for Common Stock and all series of Preferred Stock during the year ended December 31, 2023, represented a return of capital[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - The company has an employee and director incentive plan, the 2021 Omnibus Incentive Compensation Plan, and assumed RTL's 2018 plan in the merger. As of Dec 31, 2023, there were **1,004,160** securities to be issued upon exercise of outstanding options and rights, and **4,546,496** securities remaining available for future issuance under these plans[226](index=226&type=chunk)[228](index=228&type=chunk) [Reserved](index=39&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's 2023 financial results were significantly impacted by the RTL merger, leading to increased revenue, a substantial net loss due to one-time costs, higher debt, and a dividend reduction strategy Key Financial Results Comparison (2023 vs. 2022) | Metric (in millions) | 2023 | 2022 | | :--- | :--- | :--- | | **Revenue from Tenants** | $515.1 | $378.9 | | **Net Loss Attributable to Common Stockholders** | $(239.3) | $(8.4) | | **Impairment Charges** | $68.7 | $21.6 | | **Merger, Transaction and Other Costs** | $54.5 | $0.2 | | **AFFO Attributable to Common Stockholders** | $199.8 | $172.9 | | **Cash Flows from Operating Activities** | $143.7 | $181.8 | - The significant increase in net loss was primarily due to one-time costs associated with the RTL merger, including transaction costs (**$54.5 million**), settlement costs (**$29.7 million**), and impairment charges (**$68.7 million**)[302](index=302&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk) - Total gross debt increased significantly to **$5.4 billion** at year-end 2023 from **$2.4 billion** at year-end 2022, mainly due to debt assumed in the RTL merger and additional borrowings to repay RTL's credit facility[312](index=312&type=chunk)[347](index=347&type=chunk) - For the year ended December 31, 2023, cash flows from operations of **$143.7 million** funded **60.8%** of the total **$236.4 million** in dividends and distributions, with the remainder funded from available cash on hand[332](index=332&type=chunk)[394](index=394&type=chunk) - The company is actively managing its leverage, with plans to use proceeds from strategic dispositions to reduce debt. As of February 19, 2024, it had signed purchase and sale agreements and non-binding letters of intent for dispositions totaling **$147.7 million**[332](index=332&type=chunk)[338](index=338&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and foreign currency fluctuations, with most debt fixed-rate and currency risk managed through matching and derivatives - As of December 31, 2023, **80%** of the company's **$5.4 billion** total debt was fixed-rate or effectively fixed through swaps, with a weighted-average effective interest rate of **4.1%**. The remaining **20%** was variable-rate debt with a weighted-average rate of **7.2%**[407](index=407&type=chunk) - A **1%** change in annual interest rates would increase or decrease the annual interest expense on the company's unhedged variable-rate debt by approximately **$11.1 million**[409](index=409&type=chunk) - The company manages foreign currency risk by matching debt service obligations with rental income in the same currency and using derivative instruments. It is a net receiver of EUR, GBP, and CAD, so a weaker USD is generally beneficial to its operating results[410](index=410&type=chunk) - The portfolio has geographic concentrations, with **80%** of annualized rental income from the U.S. and Canada and **11%** from the United Kingdom. Asset type concentrations include Industrial & Distribution (**32%**) and Multi-Tenant Retail (**27%**)[416](index=416&type=chunk) [Financial Statements and Supplementary Data](index=65&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 financial statements and supplementary data are incorporated by reference and can be found starting on page F-1 of the report[417](index=417&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=65&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[418](index=418&type=chunk) [Controls and Procedures](index=65&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, confirmed by external auditors - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[419](index=419&type=chunk) - Management assessed internal control over financial reporting based on the COSO framework and concluded it was effective as of December 31, 2023. This assessment was audited and confirmed by PricewaterhouseCoopers LLP[421](index=421&type=chunk)[422](index=422&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2023 that materially affected, or are reasonably likely to materially affect, internal controls[423](index=423&type=chunk) [Other Information](index=66&type=section&id=Item%209B.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during Q4 2023 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the three months ended December 31, 2023[424](index=424&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=66&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[425](index=425&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=66&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's definitive 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for the 2024 Annual Meeting of Stockholders[427](index=427&type=chunk) [Executive Compensation](index=66&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for the 2024 Annual Meeting of Stockholders[428](index=428&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=66&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Details on security ownership are incorporated by reference from the company's definitive 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for the 2024 Annual Meeting of Stockholders[429](index=429&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=66&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the company's definitive 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for the 2024 Annual Meeting of Stockholders[430](index=430&type=chunk) [Principal Accountant Fees and Services](index=66&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's definitive 2024 proxy statement - Information required by this item is incorporated by reference from the registrant's definitive proxy statement for the 2024 Annual Meeting of Stockholders[431](index=431&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=67&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index of all exhibits and references the audited consolidated financial statements and Schedule III - This section contains the index to the audited consolidated financial statements (beginning on page F-1) and includes Schedule III – Real Estate and Accumulated Depreciation[434](index=434&type=chunk) - A comprehensive list of exhibits, including articles of incorporation, bylaws, debt agreements, and material contracts, is provided, with many items incorporated by reference from previous filings[436](index=436&type=chunk)[437](index=437&type=chunk) [Form 10-K Summary](index=73&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that there is no Form 10-K summary - None[448](index=448&type=chunk)

EXHIBIT 99.2 Global Net Lease, Inc. Supplemental Information Quarter ended December 31, 2023 (unaudited) Global Net Lease, Inc. Supplemental Information Quarter ended December 31, 2023 (Unaudited) Table of Contents | Item | Page | | --- | --- | | Non-GAAP Definitions | 3 | | Key Metrics | 6 | | Consolidated Balance Sheets | 7 | | Consolidated Statements of Operations | 8 | | Non-GAAP Measures | 9 | | Debt Overview | 12 | | Future Minimum Lease Rents | 13 | | Top Twenty Tenants | 14 | | Diversification by Pr ...

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, 2023 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 45-277197 ...

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financials show increased assets and liabilities, a $31.4 million Q2 2023 net loss, and decreased operating cash flow [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $4.00 billion, liabilities rose to $2.65 billion, and total equity decreased to $1.36 billion Balance Sheet Highlights (In thousands) | Balance Sheet Highlights (In thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total real estate investments, net | $3,654,228 | $3,595,270 | | Cash and cash equivalents | $100,918 | $103,335 | | **Total Assets** | **$4,001,876** | **$3,961,826** | | Mortgage notes payable, net | $995,184 | $1,233,081 | | Revolving credit facility | $1,038,502 | $669,968 | | **Total Liabilities** | **$2,646,707** | **$2,507,907** | | **Total Equity** | **$1,355,169** | **$1,453,919** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2023 net loss was $31.4 million, significantly higher than prior year, driven by merger and settlement costs Operating Results (In thousands) | Operating Results (In thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue from tenants | $95,844 | $95,177 | $190,176 | $192,310 | | Total expenses | $91,356 | $80,435 | $155,316 | $144,719 | | Merger, transaction and other costs | $6,279 | $133 | $6,378 | $141 | | Settlement costs | $15,084 | $— | $15,084 | $— | | Impairment charges | $— | $16,031 | $— | $16,261 | | **Net (loss) income** | **($26,258)** | **($716)** | **($27,148)** | **$9,825** | | Net loss attributable to common stockholders | ($31,357) | ($5,847) | ($37,346) | ($364) | | **Net loss per share — Basic and Diluted** | **($0.30)** | **($0.06)** | **($0.36)** | **($0.01)** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to $84.4 million, with increased investing activities and financing from credit facility Cash Flow Summary (In thousands) | Cash Flow Summary (In thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $84,358 | $105,893 | | Net cash used in investing activities | ($92,519) | ($35,444) | | Net cash provided by (used in) financing activities | $4,219 | ($39,667) | | **Net change in cash, cash equivalents and restricted cash** | **($3,942)** | **$30,782** | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail a proposed merger with RTL, management internalization, property acquisitions, and a proxy contest settlement - The company entered into a merger agreement with The Necessity Retail REIT, Inc. (RTL) and a concurrent agreement to internalize its advisory and property management functions, with transactions conditional upon one another[30](index=30&type=chunk) - As consideration for the internalization, the company will issue **29,614,825 shares** of its Common Stock valued at **$325.0 million** to AR Global and pay **$50.0 million** in cash[44](index=44&type=chunk) - During the six months ended June 30, 2023, the company acquired **8 retail properties** for a total of **$81.4 million**[87](index=87&type=chunk)[89](index=89&type=chunk) - The company settled litigation with Blackwells Capital by entering into a Cooperation Agreement, which included reimbursing Blackwells for **$8.8 million** in expenses and issuing **495,000 shares** of common stock as a **settlement fee**[190](index=190&type=chunk)[193](index=193&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the 317-property portfolio, proposed RTL merger, and Q2 2023 net loss from settlement and merger costs [Overview and Proposed Transactions](index=48&type=section&id=Overview%20and%20Proposed%20Transactions) The company, a REIT with 317 properties, proposes merging with RTL and internalizing management - As of June 30, 2023, the company owned **317 properties** totaling **39.6 million rentable square feet**, with a **97.7% lease rate** and a weighted-average remaining lease term of **7.6 years**[278](index=278&type=chunk) - On May 23, 2023, the company entered into an agreement to merge with The Necessity Retail REIT (RTL) and to internalize its management functions, transactions which are contingent on each other[281](index=281&type=chunk) - The merger consideration is a **fixed exchange ratio** of **0.670 shares** of GNL common stock for each share of RTL Class A common stock[283](index=283&type=chunk) [Results of Operations](index=56&type=section&id=Results%20of%20Operations) Q2 2023 net loss increased to $31.4 million, primarily due to $15.1 million settlement and $6.3 million merger costs - Q2 2023 **net loss increased** to **$31.4 million** from **$5.8 million** in Q2 2022, largely due to **$15.1 million** in settlement costs and **$6.3 million** in merger, transaction, and other costs[307](index=307&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk) - General and administrative expenses rose to **$10.7 million** in Q2 2023 from **$3.7 million** in Q2 2022, with the increase primarily attributable to approximately **$7.4 million** in legal and other costs related to a proxy contest and litigation[318](index=318&type=chunk) - **Interest expense increased** to **$27.7 million** in Q2 2023 from **$23.4 million** in Q2 2022, as the weighted-average **effective interest rate** on **total debt** rose from **3.5%** to **4.8%**[322](index=322&type=chunk)[323](index=323&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) Total debt was $2.5 billion with 58.8% leverage; increased credit facility borrowings repaid mortgage notes - **Total debt outstanding** was **$2.5 billion** as of June 30, 2023, with a **debt leverage ratio** of **58.8%**[375](index=375&type=chunk)[377](index=377&type=chunk) - In Q2 2023, the company repaid two mortgage loans totaling approximately **$248.1 million**, funding the repayments with borrowings under its Revolving Credit Facility[381](index=381&type=chunk) - The company expects to exercise the **$500.0 million** "accordion feature" on its Credit Facility to facilitate the repayment of RTL's credit facility upon the closing of the proposed merger[383](index=383&type=chunk) [Non-GAAP Financial Measures](index=67&type=section&id=Non-GAAP%20Financial%20Measures) AFFO attributable to common stockholders decreased to $41.4 million in Q2 2023 due to higher interest and operating costs Non-GAAP Metrics (In thousands) | Non-GAAP Metrics (In thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | FFO attributable to common stockholders | $5,940 | $49,481 | $36,980 | $95,083 | | Core FFO attributable to common stockholders | $27,707 | $49,956 | $58,846 | $95,566 | | **AFFO attributable to common stockholders** | **$41,410** | **$45,019** | **$81,216** | **$89,350** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There has been no material change in the company's exposure to market risk during the six months ended June 30, 2023 - There has been **no material change** in the company's exposure to market risk during the six months ended June 30, 2023[422](index=422&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the company's disclosure controls and procedures, concluding they were effective as of the end of the period - The company's **disclosure controls and procedures** were determined to be **effective** as of June 30, 2023[423](index=423&type=chunk) - **No changes** in **internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[424](index=424&type=chunk) [PART II - OTHER INFORMATION](index=73&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=73&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings related to the proxy contest with Blackwells Capital LLC were dismissed with prejudice - All legal proceedings related to the proxy contest with Blackwells Capital LLC were **dismissed with prejudice** following a Cooperation Agreement entered into on June 4, 2023[190](index=190&type=chunk)[426](index=426&type=chunk) [Item 1A. Risk Factors](index=73&type=section&id=Item%201A.%20Risk%20Factors) New risks include merger completion, fixed exchange ratio, substantial pro forma debt, and potential lower dividend - The company is subject to risks from proxy contests and activist stockholders, which can be costly, time-consuming, and disrupt operations[428](index=428&type=chunk) - The **fixed exchange ratio** for the RTL merger will not be adjusted for changes in stock values, potentially altering the value of the consideration received by RTL stockholders[430](index=430&type=chunk) - Failure to complete the proposed transactions could negatively impact stock price and business results, and may require the company to pay a **$40 million termination fee** to RTL under certain circumstances[441](index=441&type=chunk)[442](index=442&type=chunk) - Post-merger, the Combined Company will have **substantial pro forma indebtedness** of approximately **$5.3 billion**, which could limit financial flexibility and increase vulnerability to adverse economic conditions[466](index=466&type=chunk) - Following the transactions, the company intends to pay a **lower dividend rate** than it currently pays, and there is no assurance of future dividend payments[475](index=475&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales in Q2 2023; post-quarter, shares issued for settlement and advisory services under exemption - Subsequent to quarter-end, the company issued **495,000 shares** of Common Stock on July 11, 2023, to the Blackwells/Related Parties as a **settlement fee** under the Cooperation Agreement[486](index=486&type=chunk) - On July 14, 2023, the company issued **45,579 shares** of Common Stock to a third party as a non-refundable retainer for **advisory services** related to the proposed merger[488](index=488&type=chunk) [Item 3. Defaults Upon Senior Securities](index=82&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities [Item 4. Mine Safety Disclosures](index=82&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5. Other Information](index=82&type=section&id=Item%205.%20Other%20Information) The company reported no other information [Item 6. Exhibits](index=82&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with or incorporated by reference into the Quarterly Report on Form 10-Q

Merger and Internalization - Global Net Lease (GNL) signed a definitive agreement to merge with The Necessity Retail REIT (RTL), with the transaction expected to close in September 2023[1] - The merger is expected to reduce net debt to adjusted annualized EBITDA to 76x in Q4'23[1] - The combined company anticipates approximately $75 million in annual cost savings[1] - The transaction is expected to be 9% accretive to annualized AFFO per share in the first quarter after closing, compared to Q1'23[5] Portfolio Overview - 600% of the portfolio's annualized straight-line rent (SLR) is derived from investment-grade rated tenants[6] - 95% of leases feature annual cash rental increases, with 60% being fixed-rate and 28% based on the Consumer Price Index (CPI)[8] - The portfolio consists of 236 properties in the U S and Canada, and 81 properties in Europe, diversified across 139 tenants in 51 industries[6] - The weighted average remaining lease term is 76 years[11] Financial Performance - Revenue from tenants in Q2'23 was $958 million[69] - Adjusted Funds From Operations (AFFO) in Q2'23 was $414 million, or $040 per share[69] - Net debt to enterprise value is 652%[85]

Global Net Lease, Inc. (NYSE:GNL) Q1 2023 Results Conference Call May 10, 2023 1:00 PM ET Company Participants Curtis Parker - Senior Vice President Jim Nelson - Chief Executive Officer Chris Masterson - Chief Financial Officer Conference Call Participants Bryan Maher - B. Riley FBR Michael Gorman - BTIG John Massocca - Ladenburg Thalmann Mitch Germain - JMP Securities Todd Thomas - KeyBanc Capital Markets Operator Good day. And welcome to the Global Net Lease First Quarter 2023 Earnings Call. All participa ...

Portfolio Overview - As of March 31, 2023, the company owned 317 properties with a total of 39.6 million rentable square feet, which were 98.0% leased[225]. - 61% of the company's properties were located in the U.S. and Canada, while 39% were in Europe[225]. - The portfolio consisted of 55% industrial/distribution properties, 40% office properties, and 5% retail properties[225]. - The average remaining lease term for the portfolio was 7.8 years as of March 31, 2023[225]. - The company focuses on acquiring and managing a globally diversified portfolio of commercial real estate properties, primarily through sale-leaseback transactions[224]. Financial Performance - Net loss attributable to common stockholders was $6.0 million for Q1 2023, compared to a net income of $5.5 million in Q1 2022[236]. - Revenue from tenants decreased to $94.3 million in Q1 2023 from $97.1 million in Q1 2022, primarily due to foreign exchange rate changes[237]. - On a constant currency basis, revenues for Q1 2023 would have increased by $3.2 million to $97.5 million[238]. - Property operating expenses rose to $8.1 million in Q1 2023 from $7.5 million in Q1 2022, mainly due to timing of reimbursable costs[239]. - General and administrative expenses increased to $5.7 million in Q1 2023 from $3.9 million in Q1 2022, largely due to higher legal costs related to a proxy contest[244]. - Equity-based compensation expense was $2.9 million in Q1 2023, up from $2.7 million in Q1 2022, due to additional amortization of restricted shares and RSUs[245]. - Funds from Operations (FFO) attributable to common stockholders for Q1 2023 was $31,040,000, a decrease of 31.9% from $45,602,000 in Q1 2022[306]. - Core FFO attributable to common stockholders for Q1 2023 was $31,139,000, down 31.8% from $45,610,000 in Q1 2022[306]. - Adjusted Funds from Operations (AFFO) attributable to common stockholders for Q1 2023 was $39,806,000, a decrease of 10.4% from $44,331,000 in Q1 2022[306]. Cash Flow and Debt Management - Net cash provided by operating activities was $63.0 million in Q1 2023, compared to $61.8 million in Q1 2022, driven by rental income and adjustments for non-cash items[255][256]. - Cash used in investing activities totaled $88.8 million in Q1 2023, primarily for property acquisitions of $81.4 million and capital expenditures of $7.4 million[257]. - Net cash provided by financing activities was $39.5 million in Q1 2023, resulting from net proceeds of $91.0 million from borrowings under the Revolving Credit Facility[258]. - Total debt outstanding remained stable at $2.5 billion as of March 31, 2023, with a weighted-average interest rate of 4.4%[270]. - As of March 31, 2023, 67.0% of total debt was fixed-rate or swapped to fixed-rate, with a weighted average interest rate of 3.9%[271]. - The debt leverage ratio was 58.3%, up from 56.6% as of December 31, 2022, primarily due to additional borrowings under the Revolving Credit Facility[272]. - Outstanding borrowings under the Revolving Credit Facility increased to $767.9 million as of March 31, 2023, from $670.0 million as of December 31, 2022[278]. Lease and Rental Information - The company executed seven lease renewals in Q1 2023, including a lease with Rheinmetall for approximately 0.7 million square feet, generating $6.8 million per year in net new rent[235]. - Approximately 94.9% of leases contain rent escalation provisions, averaging a cumulative increase of 1.2% per year, mitigating inflation impacts[316]. - The revenue from tenants includes base rent and reimbursements for property operating expenses, primarily insurance costs and real estate taxes[237]. - The total net new straight-line rent from the Rheinmetall lease over the new weighted-average remaining lease term is projected to be $39.6 million[235]. Foreign Currency Exposure - The company is exposed to foreign currency fluctuations and utilizes derivatives to manage this risk[313]. - Average exchange rates for GBP and EUR decreased by 9.4% and 4.4%, respectively, compared to the same period last year[238]. - The company's financial performance reflects the impact of foreign exchange rates on revenue from tenants[237]. Dividend Policy - The company paid dividends at an annual rate of $1.60 per share or $0.40 per share on a quarterly basis during the three months ended March 31, 2023[309]. - The company’s ability to pay dividends is subject to restrictions under its Credit Facility, limiting distributions to 100% of Adjusted FFO for any four consecutive fiscal quarters[311]. - Total dividends and distributions for the three months ended March 31, 2023, amounted to $46,857,000, fully covered by cash flows from operations[312].

Portfolio Overview - As of December 31, 2022, the company owned 309 properties with a total of 39.2 million rentable square feet, achieving a leasing rate of 98.0%[19] - The portfolio consisted of 56% industrial/distribution properties, 41% office properties, and 3% retail properties as of December 31, 2022[19] - As of December 31, 2022, 35% of the company's properties were located in Europe, with 65% in the U.S. and Canada[54] - The company operates in eleven different countries and leases space to 138 tenants across 51 industries[22] - The United States accounts for 71.4% of the total square footage, with 229 properties and 28,000 thousand square feet, generating an annualized straight-line rent of $217,665 thousand, representing 63.9% of the total portfolio[213] - The largest tenant industry is Auto Manufacturing, comprising 12% of the total portfolio with 16 properties and an annualized straight-line rent of $40,889 thousand[209] - The United Kingdom holds 17.4% of the total portfolio with 47 properties and 59,000 thousand square feet[213] - The average remaining lease term for properties in Canada is 17.1 years, with 7 properties totaling 372 thousand square feet[207] - The average remaining lease term for properties in the Netherlands is 6.3 years, with 4 properties totaling 1,007 thousand square feet[207] - The company has a significant presence in Michigan, with 29 properties and an annualized straight-line rent of $52,938 thousand, accounting for 15.5% of the total portfolio[213] - The total annualized straight-line rent for the entire portfolio is $340,757 thousand[209] - Future minimum base rent payments total $2,647,674,000 over the next ten years and thereafter[214] - In 2023, 20 leases are expiring with an annualized straight-line rent of $9,438,000, representing 2.8% of the total portfolio[215] - The total annualized straight-line rent for all expiring leases over the next ten years is $263,482,000, accounting for 77.4% of the portfolio[215] - The McLaren property in the UK contributes 5.0% to the total portfolio annualized straight-line rent[217] - No single tenant represents more than 10% of total portfolio rentable square footage or annualized straight-line rent as of December 31, 2022[216] Financial Performance - Cash flows provided by operations were $181.8 million for the year ended December 31, 2022, while total dividends paid amounted to $187.5 million[50] - The company collected approximately 100% of the original cash rent due for the fourth quarter of 2022, consistent with the previous three quarters[28] - The company may need to reduce dividend payments or identify other financing sources if sufficient cash from operations is not generated[51] - The company's ability to pay dividends is subject to restrictions in its debt agreements, which limit distributions to 100% of Adjusted FFO for any four consecutive fiscal quarters[48] Debt and Financing - The company had $1.2 billion in gross mortgage notes payable as of December 31, 2022[59] - Outstanding debt under the Revolving Credit Facility was $670.0 million as of December 31, 2022[60] - As of December 31, 2022, the company had total indebtedness of $2.4 billion, including $1.2 billion of secured debt and $670 million under the Revolving Credit Facility[125] - Approximately $249.5 million of the company's debt is set to mature in 2023, with a weighted average interest rate of 2.8% per annum[128] - The interest rate on borrowings under the Credit Facility increased from 2.7% as of December 31, 2021, to 4.6% as of December 31, 2022[128] - 30% of the company's total indebtedness bore interest at variable rates averaging 4.4% as of December 31, 2022[131] - The company may face increased borrowing costs due to rising interest rates from the U.S. Federal Reserve and other central banks, impacting future acquisitions[132] - The company may need to restructure or refinance its debt if unable to meet obligations, which could lead to asset sales or unfavorable terms[127] - The company faces restrictions from covenants in its debt agreements, which limit operational flexibility and could hinder growth opportunities[135] - A breach of covenants could lead to an event of default, potentially causing debt to become immediately due and payable[137] - A lowering of debt ratings by agencies could increase future borrowing costs and reduce access to capital[139] Tenant and Lease Information - 60.5% of the rental income was derived from "Investment Grade" rated tenants, with 34.9% from actual investment grade tenants and 25.6% from implied investment grade tenants[23] - The weighted-average remaining lease term was 8.0 years as of December 31, 2022, down from 8.3 years in the previous year[24] - Approximately 94.5% of leases included rent escalation provisions, averaging a cumulative increase of 1.2% per year[24] - 40% of the company's tenants were either not evaluated or ranked below "investment grade" as of December 31, 2022, indicating a higher risk of lease defaults[84] - The company generated 18% of its annualized rental income from net leases with a remaining lease term of more than ten years as of December 31, 2022[85] - The concentration of properties in Michigan (16%), Texas (7%), and Ohio (6%) accounted for a total of 29% of the company's consolidated annualized rental income from the United States and Canada[72] - The auto manufacturing and financial services industries each accounted for 12% of the company's consolidated annualized rental income as of December 31, 2022, indicating significant exposure to these sectors[74] Market and Economic Conditions - The commercial real estate market is highly competitive, impacting occupancy levels and rental rates[32] - Market and economic challenges may adversely impact the company's operating results and financial condition, affecting tenant businesses and rental payments[52] - The ongoing military conflict between Russia and Ukraine may exacerbate inflation and lead to volatility in commodity prices, impacting the company's financial condition[55] - The COVID-19 pandemic has caused disruptions that may continue to impact tenants' ability to pay rent, affecting the company's cash flow[69] - Rising expenses could reduce cash flow, with potential increases in property taxes, utility costs, and insurance impacting overall profitability[93] - The real estate market is influenced by economic conditions, financing availability, and interest rates, affecting the ability to sell properties at desired prices[91] - Prolonged vacancies could lead to reduced revenues and lower cash available for dividends[87] Regulatory and Tax Considerations - The company’s REIT qualification is crucial for tax purposes, and failure to maintain it could lead to significant tax liabilities and reduced earnings available for distribution[170][171][172] - To maintain REIT status, the company must distribute at least 90% of its REIT taxable income annually, which may limit investment opportunities and require borrowing under unfavorable conditions[174] - The company may incur tax liabilities that could reduce cash available for distribution to stockholders, including a potential 100% tax on net income from prohibited transactions[173] - The company is subject to a 4% nondeductible excise tax on any distributions that fall short of certain income thresholds, which could impact overall returns to stockholders[174] - The company may face a 100% penalty tax on net income from property sales deemed as inventory or held primarily for sale, which could restrict property disposal activities[176] - The company must ensure that at least 75% of its assets consist of qualified REIT real estate assets to maintain REIT qualification, which may force liquidation of attractive investments[186] - The board of directors has the authority to revoke the company's REIT qualification without stockholder approval, which could lead to corporate-level taxes and reduced distributions[187] - The company may face adverse legislative or regulatory tax changes that could increase tax liability and reduce operating flexibility[188] - Future legislation could potentially reduce the tax advantages currently enjoyed by REITs, impacting the company's market position[189] Management and Operational Risks - The company relies on its Advisor and real estate professionals to identify investments, with no assurance of success in achieving financial objectives[44] - The company relies heavily on single tenants, making it vulnerable to their financial stability, as any default could materially reduce revenues[76] - The ongoing litigation with Blackwells Onshore could be costly and time-consuming, potentially distracting management from operations[65] - The company has limited rights to terminate agreements with the Advisor and Property Manager, with termination fees potentially reaching up to 2.5 times the previous year's compensation[114] - The company relies on the Advisor and Property Manager for essential services, and any adverse changes in their financial health could impact operations[113] - The company does not maintain key person life insurance for its executive officers, which could pose risks if key personnel leave[112] - The company may acquire or originate commercial real estate debt, exposing it to additional risks and uncertainties[121]

Financial Data and Key Metrics Changes - For the full year 2022, revenue was $378.9 million with a net loss attributable to common stockholders of $8.4 million, compared to a significant termination fee and receivable recorded in 2021 that provided a revenue benefit of approximately $14 million [46] - In Q4 2022, revenue was $93.9 million, with FFO of $23.6 million or $0.23 per share and AFFO of $42.2 million or $0.41 per share [47] - The company recorded $288.1 million in adjusted EBITDA for the year, with FFO of $166.9 million or $1.61 per share, and AFFO of $172.9 million or $1.67 per share [46][47] Business Line Data and Key Metrics Changes - The portfolio consisted of 309 properties at year-end, with 56% in industrial and distribution and 41% in office, while occupancy was at 98% with a weighted average remaining lease term of eight years [36] - In 2022, the company completed 12 lease renewals and four tenant expansions, totaling 3.8 million square feet, resulting in $154 million in net new straight-line rent [39][35] Market Data and Key Metrics Changes - The company noted that nearly 95% of leases feature annual rental increases averaging 1.2%, with 63% being fixed rate and 26% based on the consumer price index [40] - The company’s balance sheet ended Q4 2022 with net debt of $2.3 billion at a weighted average interest rate of 4%, with a net debt to adjusted EBITDA ratio of 8.5 times [48] Company Strategy and Development Direction - The company remains focused on industrial and distribution properties, with a strategic approach to acquisitions and dispositions, emphasizing high-quality tenants and long-term leases [15][42] - The company completed a $75 million acquisition of eight properties leased to Boots UK Limited, despite not focusing on retail assets, due to the compelling cap rate of 10.6% [41][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience despite rising inflation and interest rates, noting that GNL's common stock outperformed the S&P 500 by 11% and its peer group by 32% in total return [34] - The company anticipates continued opportunities in both the U.S. and Europe, with rising interest rates leading to better cap rates [63][90] Other Important Information - The company disposed of three properties for $56 million in 2022, believing they had reached maximum value [45] - The company has a well-cushioned interest coverage ratio of 2.9 times and liquidity of approximately $192.3 million as of December 31, 2022 [49] Q&A Session Summary Question: What is the outlook for leasing activity and tenant renewals? - Management confirmed proactive engagement with tenants for renewals and expansions, expecting more activity in 2023 [60] Question: Regarding the Walgreens Boots acquisition, is there potential for more retail acquisitions? - Management stated that while retail is not a focus, compelling opportunities at attractive cap rates would be considered [61][75] Question: What are the expectations for acquisition opportunities in 2023? - Management indicated that both the U.S. and Europe present good opportunities, with rising cap rates making acquisitions more favorable [63][90] Question: Can you elaborate on the acquisition pipeline and pricing trends? - Management noted that cap rates are rising, with current asks around 7% to 8.5%, compared to lower rates in previous years [87] Question: What is the plan for managing debt maturities and interest rates? - Management discussed using the credit facility for flexibility and evaluating the potential for swaps as interest rates fluctuate [92][95]