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Global Net Lease(GNL) - 2024 Q4 - Annual Report

Part I Business Overview Global Net Lease, Inc. is an internally managed REIT with a diversified global portfolio, focused on deleveraging through dispositions and generating stable cash flows - On September 12, 2023, the company acquired RTL and simultaneously internalized its advisory and property management functions, transitioning from an externally managed to an internally managed REIT1315 Portfolio Overview as of December 31, 2024 | Metric | Value | | :--- | :--- | | Total Properties | 1,121 | | Rentable Square Feet | 60.7 million | | Occupancy | 97% | | Weighted-Average Remaining Lease Term | 6.2 years | Portfolio Composition by Segment (by Annualized Straight-Line Rent) | Segment | Percentage | | :--- | :--- | | Industrial & Distribution | 34% | | Multi-Tenant Retail | 28% | | Single-Tenant Retail | 21% | | Office | 17% | - The company's current strategic focus is on reducing leverage through select dispositions, with approximately $835.0 million of assets sold in 2024 under this initiative1618 - As of December 31, 2024, 60.5% of rental income was derived from tenants rated as Investment Grade (31.4% actual rating, 29.1% implied rating)19 Risk Factors The company faces significant risks including acquisition/disposition challenges, capital market reliance, dividend reductions, tenant defaults, illiquid real estate, international exposure, substantial debt, and REIT status maintenance - The company faces risks related to its ability to complete property acquisitions and dispositions on advantageous terms, including the pending sale of 100 multi-tenant retail centers for approximately $1.78 billion3941 - Cash flows from operations were $299.5 million for the year ended December 31, 2024, while total dividends paid were $316.3 million, indicating a reliance on other sources like borrowings to fund a portion of the dividends4748 - The company has significant international investments, with 20% of properties by annualized rental income located in Europe, exposing it to foreign currency fluctuations, geopolitical instability, and varying legal and regulatory environments52 - The retail and office property sectors face headwinds, with retail affected by the shift to e-commerce and the office sector impacted by increased telecommuting, which could decrease demand and rental rates for these properties (28% and 17% of annualized rent, respectively)6770 - As of December 31, 2024, the company had $4.7 billion of total gross indebtedness, which could require a substantial portion of cash flow for debt service and limit financial flexibility124 - 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 stockholders162163 Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments189 Item 1C. Cybersecurity The company maintains an effective cybersecurity risk management program, overseen by the Audit Committee, with no material threats identified - The company has a cybersecurity risk management program designed to protect critical systems and information, which is integrated into its enterprise risk management190191 - The Board's Audit Committee provides oversight for the cybersecurity program, reviewing policies and risk assessments from management192193 - No known cybersecurity threats or prior incidents have been identified that are reasonably likely to materially affect the company191 Item 2. Properties The company's diversified portfolio comprises 1,121 properties, 60.7 million square feet, 97% occupied, with a 6.2-year weighted-average lease term Portfolio Summary by Segment (as of Dec 31, 2024) | Segment | Number of Properties | Annualized Straight-Line Rent (in thousands) | % of Total Rent | Square Feet (in thousands) | Occupancy | Wtd. Avg. Lease Term (Years) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Industrial & Distribution | 206 | $221,066 | 34% | 31,938 | 99% | 6.6 | | Multi-Tenant Retail | 101 | $181,798 | 28% | 14,785 | 91% | 5.5 | | Single-Tenant Retail | 748 | $135,767 | 21% | 7,261 | 99% | 7.4 | | Office | 66 | $117,845 | 17% | 6,715 | 97% | 4.3 | | Total | 1,121 | $656,476 | 100% | 60,699 | 97% | 6.2 | Top 5 Tenant Industries by Annualized Straight-Line Rent (as of Dec 31, 2024) | Industry | % of Total Rent | | :--- | :--- | | Financial Services | 7% | | Auto Manufacturing | 6% | | Discount Retail | 6% | | Specialty Retail | 5% | | Healthcare | 5% | Lease Expiration Schedule (Next 5 Years) | Year of Expiration | Number of Leases Expiring | Annualized Straight-Line Rent (in thousands) | % of Total Portfolio Rent | | :--- | :--- | :--- | :--- | | 2025 | 176 | $47,465 | 7.2% | | 2026 | 202 | $53,966 | 8.2% | | 2027 | 249 | $56,870 | 8.7% | | 2028 | 306 | $84,365 | 12.9% | | 2029 | 285 | $86,013 | 13.1% | - The portfolio has no single tenant or property representing more than 10% or 5%, respectively, of total portfolio annualized straight-line rent205206 Item 3. Legal Proceedings The company is not involved in any material legal proceedings - There are no material legal proceedings to report208 Item 4. Mine Safety Disclosures This section is not applicable to the company - Not applicable209 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities GNL common stock trades on NYSE; dividends were reduced in 2024 and planned for 2025 to support deleveraging, with 2024 dividends primarily return of capital - The Board reduced the annual common stock dividend to $1.10 per share in February 2024 and announced plans for a further reduction to $0.76 per share starting in April 2025 to lower leverage221222 Tax Characterization of 2024 Dividends | Security | % Return of Capital | | :--- | :--- | | Common Stock | 100.0% | | Series A Preferred Stock | 89.3% | | Series B Preferred Stock | 89.3% | | Series D Preferred Stock | 89.3% | | Series E Preferred Stock | 89.3% | Quarterly Dividend Rates per Share for Preferred Stock | Security | Quarterly Dividend per Share | | :--- | :--- | | Series A Preferred | $0.453125 | | Series B Preferred | $0.4296875 | | Series D Preferred | $0.46875 | | Series E Preferred | $0.4609375 | Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 2024 financial results show increased revenue and reduced net loss, driven by the RTL acquisition, with strategic asset sales and dividend adjustments aimed at deleveraging Comparison of Operating Results (Years Ended Dec 31) | (In thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Revenue from tenants | $805,010 | $515,070 | | Total expenses | $655,541 | $528,780 | | Impairment charges | $90,410 | $68,684 | | Gain (loss) on dispositions | $57,015 | $(1,672) | | Interest expense | $326,932 | $179,411 | | Net loss attributable to common stockholders | $(175,316) | $(239,348) | FFO and AFFO Reconciliation Summary (Years Ended Dec 31) | (In thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net loss attributable to common stockholders | $(175,316) | $(239,348) | | FFO attributable to common stockholders | $208,022 | $53,279 | | Core FFO attributable to common stockholders | $229,925 | $138,719 | | AFFO attributable to common stockholders | $303,809 | $199,801 | - On February 25, 2025, the company entered an agreement to sell 100 multi-tenant retail centers for a base price of approximately $1.78 billion, which represents substantially all of its Multi-Tenant Retail segment, with the disposition expected to close in phases during the first and second quarters of 2025232328 - In 2024, cash from operations of $299.5 million covered 94.7% of the $316.3 million in total dividends paid, with the remainder funded by available cash on hand323371 - Total gross debt outstanding decreased from $5.4 billion at year-end 2023 to $4.7 billion at year-end 2024, with a weighted-average interest rate of 4.8% for both periods333 Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate risk with 91% fixed-rate debt and mitigates foreign currency risk through matching obligations and derivatives Debt Profile as of December 31, 2024 | Debt Type | Amount (in thousands) | % of Total | Wtd. Avg. Interest Rate | | :--- | :--- | :--- | :--- | | Fixed-rate | $4,312,770 | 91.0% | 4.7% | | Variable-rate | $401,143 | 9.0% | 6.0% | | Total | $4,713,913 | 100.0% | 4.8% | - A 1% change in interest rates would increase or decrease annual interest expense on unhedged variable-rate debt by approximately $4.0 million386 - The company manages foreign currency risk by matching debt service and rental obligations in the same currency and using foreign currency forward contracts and put options, with these derivatives in a net asset position of $1.6 million as of December 31, 2024388389 Item 8. Financial Statements and Supplementary Data This section incorporates the company's consolidated financial statements and supplementary data by reference from page F-1 - The consolidated financial statements and supplementary data are included starting on page F-1 of the Annual Report394 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported395 Item 9A. Controls and Procedures Disclosure controls and internal control over financial reporting were effective as of December 31, 2024, as concluded by management and confirmed by external auditors - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were effective396 - Management's assessment, based on the COSO framework, concluded that internal control over financial reporting was effective as of December 31, 2024, and this assessment was audited and confirmed by PricewaterhouseCoopers LLP398399 Item 9B. Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 trading plans during Q4 2024 - No directors or officers adopted, modified, or terminated Rule 10b5-1 trading plans during the three months ended December 31, 2024401 Part III Items 10-14 Information for Items 10-14 is incorporated by reference from the forthcoming 2025 proxy statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the forthcoming 2025 proxy statement405406407 Part IV Item 15. Exhibits and Financial Statement Schedules This section lists financial statements, schedules, and exhibits, including consolidated financial statements and Schedule III, along with various agreements - The report includes audited consolidated financial statements and Schedule III – Real Estate and Accumulated Depreciation411 - The independent auditor's report from PricewaterhouseCoopers LLP identifies the impairment assessment of real estate investments as a Critical Audit Matter due to the significant management judgment involved in estimating future cash flows446447 Item 16. Form 10-K Summary The company did not provide a summary under this item - None provided427