PART I Business 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 REIT1738 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 ratings2122 - 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 year363738 Risk Factors 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 internalization4446 - 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 costs44125 - Market and economic challenges, including inflation, decreased demand for office space, and the shift to online retail, may adversely affect rental revenues and property values447476 - 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 environments60 - Failure to maintain REIT qualification would subject the company to U.S. federal income tax at corporate rates, significantly reducing net earnings available for distribution44161 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None185 Cybersecurity 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 management187188 - The Board's Audit Committee provides oversight for the cybersecurity program, reviewing risk assessments and management's implementation of controls189 - 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 condition188 Properties 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 2029201 Legal Proceedings The company reports no material legal proceedings pending - None205 Mine Safety Disclosures This item is not applicable to the company - Not applicable206 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 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 - 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 leverage217390 - 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 capital212213214215 - 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 plans226228 Reserved This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations 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)302304305 - 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 facility312347 - 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 hand332394 - 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 million332338 Quantitative and Qualitative Disclosures About Market Risk 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 - 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 million409 - 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 results410 - 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 Financial Statements and Supplementary Data 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 report417 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 - None418 Controls and Procedures 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, 2023419 - 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 LLP421422 - 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 controls423 Other Information 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, 2023424 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable425 PART III Directors, Executive Officers and Corporate Governance 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 Stockholders427 Executive Compensation 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 Stockholders428 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 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 Stockholders429 Certain Relationships and Related Transactions, and Director Independence 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 Stockholders430 Principal Accountant Fees and Services 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 Stockholders431 PART IV Exhibits and Financial Statement Schedules 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 Depreciation434 - 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 filings436437 Form 10-K Summary The company indicates that there is no Form 10-K summary - None448
Global Net Lease(GNL) - 2023 Q4 - Annual Report